Historic turning point with homework: The EU-India trade agreement from a practical perspective
Mike Batra and Dr. Johannes Wamser (founder of the India consultancy Wamser + Batra GmbH) in conversation about new impulses and lasting to-dos for German SMEs
Interviewer: After almost 20 years of negotiations, the EU-India trade agreement was signed yesterday. Politicians are talking about the “biggest trade agreement of all time”, Ursula von der Leyen about a “historic moment”. What does this mean for German SMEs?
Johannes Wamser: Look, yes, it is an important milestone. A free trade zone for 2 billion people. Indian tariffs will be dropped on over 90 percent of European goods. Tariffs on cars will fall from 110 to 40 percent. These are real figures. These are opportunities.
But let’s be honest: a trade agreement is paper. It is a legal framework. It lowers hurdles, sure. But it doesn’t eliminate the operational complexity that you have to deal with in India on a daily basis. Nothing changes for the time being.
Mike Batra: That’s exactly the point. Many companies think: great, tariffs down, here we go. But the real challenges lie elsewhere. Bureaucracy. Compliance. Unclear procedures. Partners who don’t deliver what they promise. Cultural differences that you underestimate.
Let me put it this way: we have customers who have been paying punitive tariffs for years. 10, 15, 20 percent. Without knowing it. Because the SRP process is not managed properly. A trade agreement won’t change that.
Interviewer: Nevertheless, you talk about opportunities. Which ones specifically?
Mike Batra: The opportunities are absolutely real. Let me mention four points.
1. market access: By 2030, India will have a middle class of 400 million people. That is more than the entire EU. They want consumer goods, machines, medical technology, cars and luxury products. Demand is increasing massively.
2. production location: China is becoming too risky for many. The agreement makes India more attractive as an alternative. They have qualified specialists there who speak English. The costs are competitive. And now there are also better trading conditions.
3. customs savings: Yes, you save money in real terms when exporting. But – and this is important – only if you get the compliance requirements right.
4. geopolitical diversification: The USA has been slapping punitive tariffs of 50 percent on Indian exports since 2025. This makes the EU even more important for India. And that increases its value as a European partner.
Johannes Wamser: What Mike says is true. The agreement also sends out a political signal. It shows that the EU and India are thinking long-term. That gives investors courage.
But political declarations of intent are one thing. The operational reality on the ground is the other. And these are two completely different worlds.
Interviewer: What do you mean by operational reality? What is going wrong?
Johannes Wamser: Let me name three main risks.
1. bureaucracy and changing regulation.
India remains highly bureaucratic. Period. Even if customs duties fall: customs clearance takes time. Documentation is complicated. GST rules are changing. Goods need to be classified correctly. We have customers who wait months for approvals. Even though everything is theoretically clear. This is everyday life.
2. SVB procedure and hidden costs.
The Special Valuation Branch procedure is mandatory for imports between affiliated companies. Sounds technical. And it is. Many local service providers don’t know the rules properly. Or they make mistakes. And then you suddenly pay 10, 15, 25 percent penalty duties. Without realizing it. So the trade agreement doesn’t change the fact that you have to manage these procedures properly.
3. local partners and conflicts of interest.
Many companies work with agents or sales partners. They are often only active in certain regions. Success in Gujarat does not mean success in Tamil Nadu. It’s like Bavaria and Berlin. And conflicts of interest often remain unclear. Does the partner have other customers? Does he compete with you?
Mike Batra: I’ll add something else. The discrepancy between presentation and reality. Many Indian partners come with impressive presentations. Glossy PowerPoints. Big promises. But take a closer look. The operational implementation often falls far short of the self-portrayal. The trade agreement does not solve this problem either.
Interviewer: What advice do you have for SMEs that want to enter India for the first time or expand?
Johannes Wamser: Three things.
1. thinking before acting.
Use the agreement as an opportunity, of course. But not as a carte blanche. Ask yourself the right questions. Who are your real customers in India? Which sales structures suit your business? What regulations apply to your products? The agreement reduces customs duties. Good. But it does not answer your strategic questions.
2. compliance from day one.
Invest in clean compliance management. SRP procedures, GST structures, contract design, customs classification. Sounds dry. And it is. But it will cost you a fortune if you ignore it. Risk prevention is always cheaper than damage limitation. We have cases where companies suddenly had to pay very high amounts after five years. Because nobody knew the rules.
3. partners who understand both worlds.
Work with people who know the Indian reality AND adhere to German quality and compliance standards. Not or. Both. Do not rely on fine words.
Mike Batra: And one more thing. Market exploration before investment. Go there. In person. We organize structured market exploration trips, for example. Not tourist tours with token talks, but real talks with real decision-makers. Customers. Partners. This gives you a realistic picture. Who are your customers? What prices, discounts and requirements are customary in the market? Are the partners suitable?
Interviewer: India is being traded as an alternative to China. Does that work?
Johannes Wamser: Yes and no. It depends on what you expect. India has massive advantages. Democracy. Rule of law. Young, dynamic, English-speaking. Infrastructure is growing. But it’s not a one-to-one replacement for China. The differences are real.
Infrastructure: China has high-speed logistics. Perfectly timed. You still have power cuts in parts of India.
Efficiency: China’s bureaucracy runs faster. In India, things are slower and more unpredictable.
Scaling: In China, you scale quickly. In India, you need patience. Local networks. Cultural understanding.
Mike Batra: And India is not a uniform market. Almost everyone underestimates that. It’s more like 28 different countries. Different languages. Cultures. Regulations. What works in Bangalore doesn’t automatically work in Kolkata. You need a strategy for each region.
Interviewer: You keep emphasizing “transparency” and “no whitewashing”. Why is that?
Mike Batra: Because we went through the school ourselves. Johannes and I both had years of operational responsibility in India. Budgets. Crises. Successes. We know how quickly small mistakes can have big consequences.
And we also know that many consultants sell nice concepts. But when it comes down to it, they don’t take responsibility for implementation. We do things differently. We clearly state what works. What is risky. What we can take on. And what we can’t.
Johannes Wamser: For us, transparency also means disclosing conflicts of interest. We do not work with commissions from any third-party providers. We have no hidden interests in partner companies. What you buy from us is expertise and implementation power. Nothing else.
Interviewer: To conclude: What is your most important advice for companies that want to use the FTA as an opportunity?
Mike Batra: Seize the moment. But with method. The agreement creates a good starting position. Politically. Economically. But success in India depends on proper preparation. On realistic planning. On professional implementation.
Phase one: Quality before speed. Understand the market. The regulation. The risks.
Phase two: Speed before perfection. Work pragmatically, iteratively. But on a solid basis.
Johannes Wamser: And think long-term. India is not a market for quick wins. If you want to be successful here, you need patience. A willingness to invest. The right partners.
But then – and I mean this seriously – the potential is enormous. Right now. With this trade agreement.
Interviewer: Thank you very much for the interview!
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