The India–EU Free Trade Agreement may be negotiated between governments, but its economic impact will ultimately depend on what happens within India’s states, argued Dr Bidisha Bhattacharya, Associate Fellow and Head of Research, Centre for Economy and Trade, Chintan Research Foundation (CRF), while setting the context for a business-focused session at the National Policy Roundtable on Fiscal Federalism and India–EU FTA Readiness in New Delhi on 6 October 2026.
Bhattacharya’s central argument was straightforward: market access is national, but market presence is local.
In her presentation, she introduced the emerging framework for a State Readiness Index for the India–EU FTA, developed to assess whether states possess the conditions needed to convert trade opportunities into investment and production. The framework examines seven pillars, including export ecosystems, standards, logistics, fiscal space, investment, skills and green transition.
“The FTA delivers market access, no doubt. But whether that turns into market presence: investment, production, jobs- depends on location advantages, and in India those are built by States,” Bhattacharya said in explaining the rationale behind the index.
Drawing on economist John Dunning’s eclectic or OLI paradigm, ownership, location and internalisation- she argued that while firms bring technology, brands and know-how, their decision on where to invest is strongly influenced by location advantages. Reliable power, efficient logistics, skilled workers, land, approvals and access to clean energy therefore become critical determinants of investment.
The proposed index does not seek to produce a conventional league table of states. Instead, Bhattacharya argued for a diagnostic approach that identifies the binding constraint holding back each state.
“Every state leads somewhere, and most states lead anywhere,” she observed, pointing to the different strengths of states across logistics, manufacturing, power, investment, business reforms, skills and renewable energy.
The presentation also highlighted the importance of foreign direct investment in translating the FTA into long-term economic activity. According to Bhattacharya, EU-27 countries account for 16.2 per cent of India’s cumulative FDI equity inflows since April 2000, amounting to around US$128 billion. The question, she argued, is not simply how much more investment India can attract, but where that investment will go.
She proposed four broad areas of action for states: linking public finance to trade readiness; expanding access to green power for export clusters; using quality certification as an incentive for exporters; and improving transparency through state-level trade and FTA readiness data.
For India’s states, therefore, the challenge is no longer simply to participate in the opportunities created by the India–EU FTA. It is to build the infrastructure, skills, regulatory predictability and investment ecosystems that allow businesses to stay, scale and compete in the European market.
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