India Allows EU Banks 15 Branches Under Free Trade Agreement

India has agreed to allow European Union banks to open up to 15 branches over a four-year period under the recently concluded India–EU Free Trade Agreement (FTA). The move marks a calibrated opening of India’s financial services sector while retaining safeguards for domestic stability and national interests, according to the commerce ministry.

Market Access for EU Banks Explained

Under the agreement, India has committed to providing limited but structured market access to EU banks through branch expansion. Currently, European banks operating in India include Deutsche Bank, BNP Paribas, and Societe Generale. The cap of 15 branches over four years reflects India’s cautious approach to financial sector liberalisation, balancing foreign participation with regulatory oversight by domestic authorities.

FDI Commitments in Banking and Insurance

The FTA also includes broader investment commitments. India has offered 100 per cent foreign direct investment in the insurance sector and 74 per cent FDI in banking services. These commitments align with India’s long-term objective of attracting stable foreign capital, improving service efficiency, and integrating more deeply with global financial markets without compromising prudential norms.

Safeguards, National Security, and Rules of Origin

The commerce ministry clarified that India has secured carve-outs for national security and retained policy space in sensitive sectors such as legal services. On trade safeguards, the agreement includes a bilateral safeguard mechanism. If tariff liberalisation leads to a surge in EU imports that harms domestic industries, India can temporarily raise duties up to the Most Favoured Nation level. Such measures can be applied for two years and extended to a maximum of four years after review.

Important Facts for Exams

• India has allowed EU banks to open 15 branches over four years under the FTA.
• FDI commitment is 100 per cent in insurance and 74 per cent in banking services.
• Bilateral safeguard measures can last up to a maximum of four years.
• Rules of origin exclude minimal processes like packaging or labelling.

Intellectual Property and Review Mechanism

On intellectual property rights, the government stated that the India–EU FTA does not obligate India to amend or dilute its existing IP laws. This preserves policy autonomy in pharmaceuticals, innovation, and public interest regulation. The agreement also provides for a general review by a joint committee within five years of its entry into force, and subsequently every five years, ensuring scope for recalibration as trade and investment flows evolve.