After nearly two decades of negotiations, India and the European Union (EU) have successfully concluded talks for a comprehensive Free Trade Agreement (FTA). The landmark deal, dubbed "the mother of all deals" by Commerce and Industry Minister Piyush Goyal, is expected to be formally announced at a high-level summit in New Delhi on January 27, 2026. The agreement is likely to be implemented by early 2027, following legal vetting and ratification by both the European Parliament and the Union Cabinet in India.
The FTA is anticipated to significantly boost economic ties, reduce tariffs, and strengthen strategic partnerships between India and the EU amidst a changing global trade landscape. Bilateral trade in goods between India and the EU reached $136.53 billion in 2024-25, making the EU India's largest trading partner. The services trade amounted to $83.10 billion in 2024. The EU accounts for approximately 17% of India's total exports, while India receives 9% of the EU's total overseas shipments.
For India, the FTA presents a strategic opportunity to reduce its dependence on China, increase exports to Europe, and cushion the impact of protectionist policies in other regions. Indian exports currently face duties of up to 50% in some markets, making the FTA crucial for diversifying export destinations. The agreement is expected to benefit sectors such as textiles, pharmaceuticals, automobiles, technology, steel, petroleum products, and electrical machinery. Specifically, labor-intensive sectors like clothing, leather, and pharmaceuticals are expected to see improved competitiveness in the EU market. Furthermore, growth is anticipated in Indian exports of services, particularly in telecommunications, transport, and business services.
Under the terms of the FTA, import duties on EU-made cars priced above €15,000 are set to decrease to 40% from the current levels of up to 110%, with further reductions planned in the coming years. However, import duty reductions will not apply to electric vehicles (EVs) for the first five years after the FTA is finalized, a measure intended to protect domestic EV manufacturers.
The India-EU FTA is one of several trade pacts that the Indian government has finalized since 2014, including agreements with Australia, the UK, the UAE, the EFTA bloc, and Mauritius. As of early 2026, India is actively involved in negotiations for 12 trade agreements covering 51 countries, with a focus on finalizing FTAs with the US and the EU.
The successful conclusion of FTA negotiations was confirmed by Commerce Secretary Rajesh Agrawal, who described the pact as balanced and forward-looking from India's perspective. European Commission President Ursula von der Leyen, who attended India's Republic Day celebrations, emphasized the strategic importance of the partnership, stating that "a successful India makes the world more stable, prosperous and secure".
While the announcement of the FTA is imminent, the agreement will come into effect only after legal vetting and formal signing on a mutually agreed date. The FTA also requires approval from the European Parliament and clearance from the Union Cabinet in India. Analysts anticipate that the agreement will expand trade without posing significant risks to domestic industries, as the India-EU economic relationship is characterized by structural complementarity rather than rivalry.
