India and the European Union (EU) have concluded negotiations on a comprehensive Free Trade Agreement (FTA) after nearly two decades of talks, in what leaders have described as a landmark economic partnership.
Prime Minister Narendra Modi and European Commission President Ursula von der Leyen jointly announced the conclusion of the talks at the 16th India-EU Summit in New Delhi on 27 January 2026, framing the deal as transformative for bilateral trade, investment and strategic cooperation.
The pact often dubbed the “mother of all deals” seeks to liberalise trade across goods and services, slash tariffs on a wide range of products and deepen economic integration between India and the EU’s 27 member states, representing a combined market of about 2 billion people and roughly 25 % of global GDP.
While negotiations are concluded, formal signing and ratification processes will follow before the treaty enters into force, likely by late 2026 or early 2027.
Historic Breakthrough in Global Trade
India’s Commerce Secretary Rajesh Agrawal confirmed the conclusion of negotiations on a comprehensive FTA, calling it “balanced and forward-looking” and an opportunity to integrate India more closely with the EU economy after sustained talks that began in 2007 and were relaunched in 2022 after a long hiatus.
The FTA is expected to eliminate or reduce tariffs on more than 90 % of traded goods between India and the EU, including significant reductions in duties on machinery, automobiles, chemicals, wines, spirits and processed foods with tariffs on EU exports to India set to be phased out or cut sharply over several years.
European support mechanisms of around €500 million have been pledged to encourage energy transition and emissions reduction efforts in India as part of the broader cooperation framework.
Under earlier plans reported by international news agencies, India has agreed to significantly lower import duties on EU-made cars, with duties on select premium vehicles falling from as high as 110 % to 40 % initially, and further phased cuts planned over time. Battery electric vehicles will be excluded from these cuts initially for five years to protect domestic EV production, particularly for companies like Tata Motors and Mahindra.
Strategic, Economic and Diplomatic Layers
The deal was unveiled against a backdrop of shifting global trade dynamics, including rising tariffs imposed by third countries. Ursula von der Leyen, attending India’s 77th Republic Day as Chief Guest alongside European Council President António Costa, emphasised that a “successful India makes the world more stable, prosperous and secure,” signalling the broader strategic significance of the agreement beyond pure economics.
Prime Minister Modi described the FTA as reflective of “shared democratic values” and a mutual ambition to diversify and deepen economic partnerships amid rising global uncertainty. Brussels has also been pursuing strategic autonomy in trade, recently sealing agreements with partners such as Indonesia, Mexico and South American bloc Mercosur, with the India FTA now viewed as a capstone amid widening global protectionist pressures.
Bilateral trade between India and the EU stood at around $136.5 billion in 2024-25, making the bloc India’s largest trading partner underscoring the economic scale of the relationship and the incentive for both sides to conclude the pact.
The FTA is expected to help India diversify export markets, particularly as duties of up to 50 % persist in some U.S. markets following recent tariff actions, and to reduce reliance on any single trading partner or supply chain route.
Path Ahead: Signing, Implementation and Stakeholder Views
Although talks are concluded, the FTA will not be signed immediately. Both Indian and EU officials stressed that the text must undergo legal review, translation and internal ratification processes steps that typically take several months.
Legal “scrubbing” of the agreement is likely to take five to six months, while final approval must be secured from India’s Union Cabinet, the European Parliament and EU member state bodies before the treaty can be legally enforced. Implementation is currently projected for late 2026 or early 2027 if all processes proceed smoothly.
Stakeholders have reacted with a mix of optimism and caution. Indian exporters in labour-intensive industries such as textiles, leather, chemicals, electronics and jewellery see expanded market access as a boon that could help them overcome tariff disadvantages relative to competitors from duty-free regions. Some European industries, particularly in steel and carbon-intensive sectors, have expressed concerns about competitive pressures and compliance with evolving climate-aligned regulations.
The agreement also includes provisions beyond tariff cuts, such as services liberalisation, investment protection, simplified customs procedures and cooperation on regulatory standards and sustainability goals elements designed to support broader, integrated economic engagement and mutual benefit.
The Logical Indian’s Perspective
The conclusion of the India-EU FTA negotiations stands as a compelling example of how sustained diplomacy, patience and mutual respect can bridge years of complex discussion to unlock cooperation that benefits millions on both sides.
At a time when global trade is beset by rising protectionism and geopolitical friction, this partnership illustrates that dialogue and strategic economic convergence need not be forfeited to short-term nationalist impulses.
