India and the European Union (EU) have announced a landmark free trade agreement (FTA), described by leaders as the “mother of all trade deals”, concluding nearly two decades of negotiations and creating one of the world’s largest trade pacts. The announcement was made on January 27, 2026, during a summit in New Delhi attended by Indian Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President António Costa.
The deal is set to open a market of roughly 2 billion people and covers a comprehensive free trade framework for goods and services, investment, and regulatory cooperation between India and the EU’s 27 member states. It is the culmination of negotiations that began in 2007 and were relaunched in 2022 after long pauses and complex discussions.
Under the agreement:
- Tariffs on around 96–97 percent of EU exports to India will be eliminated or significantly reduced, helping European companies save up to €4 billion annually in duties.
- India will reciprocate with preferential access for nearly all of its exports to the EU, benefiting sectors such as textiles, gems, leather, marine products and engineering goods.
- India’s high tariffs on certain imported European goods, including automobiles, wine, spirits and industrial products, will be phased down over time (e.g., car tariffs reducing from up to 110 percent to around 10 percent under quota arrangements).
- The deal also includes simplified customs procedures, regulatory cooperation and support mechanisms, such as a €500 million EU fund to assist India with greenhouse gas reduction and industrial decarbonisation.
Leaders highlighted the pact’s strategic significance amid global economic pressures, including rising protectionism and geopolitical competition, particularly with the United States and China. Modi called it a historic milestone that will bring “many opportunities for India’s 1.4 billion people and millions in the EU,” while von der Leyen said the agreement creates “a free trade zone of two billion people.”
The agreement still requires ratification by the European Parliament, EU member states and India’s cabinet before it can be fully implemented; officials expect formal signing and entry into force within the next year following legal and legislative reviews.
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