India, EU announce Free Trade Agreement

• 28 Jan 2026
• 85 Views

On 27 January 2026, India and the European Nation (EU) successfully concluded negotiations for a free trade agreement (FTA) as both sides aim to deepen ties amidst tensions with the Trump government. Under this agreement, the EU will eliminate tariffs on 99.5% of the goods that India exports. Most tariffs will decrease to 0% as soon as the agreement takes effect. In return, India has agreed it would provide tariff concessions on 97.5% of the traded value between the two economies. 

Commerce Minister Piyush Goyal and European Commissioner for Trade and Economic Security Maroš Šefčovič signed the joint announcement regarding the conclusion of the FTA negotiations. This event was witnessed by Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and President of the European Council António Costa.

Ms. von der Leyen said in her statement, “We have delivered the mother of all deals”. She further said, “We are creating a market of 2 billion people. This is a tale of two giants - the world’s second and fourth largest economies. Two giants who choose partnership in a true win win fashion. A strong message that cooperation is the best answer to global challenges.”

Earlier, on 26 January 2026, Commerce Secretary Rajesh Agrawal had given confirmation that official-level negotiations were being finalized, and both sides were ready to announce the successful conclusion of Free Trade Agreement talks on January 27. Visiting European Union leaders stated that a successful India is in the world's interest. 

The conclusion of the EU-India FTA represents the end of a two-decade-long process for which the discussions first started in 2007. Given that bilateral trade has already surpassed $136 billion, sources noted that this deal is anticipated to be “one of the biggest” bilateral deals in the world. 

The European Commission announced that it will eliminate tariffs on most exports of chemicals, machinery and electrical equipment as well as aircraft and spacecraft following a phased reduction approach. Notably, tariffs on motor vehicles, which are currently as high as 110%, will be lowered to 10% under a quota of 250,000 vehicles. This quota is much larger than the 37,000 unit quota that India granted to the UK in a deal signed last July. 

India will also reduce tariffs on wine, beer, and olive oil imported from the EU. Brussels stated that this agreement would enhance investment flows, improve access to European markets, and deepen supply-chain integration. Additionally, India reported that almost all of its exports will receive preferential access to the EU, with tariffs on textiles, leather, marine products, handicrafts, gems and jewelry being either reduced or totally eliminated. 

While commodities such as tea, coffee, spices and processed foods will benefit from this agreement, India has wisely protected certain sensitive sectors including dairy, cereals, poultry, soymeal and certain fruits and vegetables to balance export growth with domestic priorities. 

Furthermore, Delhi and Brussels have agreed upon a mobility framework that eases restrictions for professionals who are traveling between India and EU in short term. Regarding the agreement, Prime Minister Modi said, “This is not just a trade agreement. This is a new blueprint for shared prosperity.” 

Sources: The Hindu, BBC News