India and the European Union (EU) have concluded a landmark Free Trade Agreement (FTA), creating what leaders describe as the largest bilateral trade deal either side has ever signed.
The agreement was jointly announced by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen at the 16th India EU Summit on January 27, 2026, following nearly two decades of intermittent negotiations that were relaunched in 2022. Officials on both sides described the pact as transformative, positioning India and the 27 member EU as trusted partners committed to open markets and predictable rules.
Together, India and the EU account for approximately 25 percent of global Gross Domestic Product (GDP) and nearly one third of world trade. Their economic integration is expected to unlock significant new trade and investment flows across goods, services and emerging sectors, creating a free trade zone covering roughly 2 billion people.
Von der Leyen described the accord as the mother of all deals, stating that Europe and India are making history. She emphasized that both sides are set to benefit economically, adding that the agreement sends a strong signal that rules based cooperation still delivers great outcomes.
Modi called the partnership with the EU a blueprint for shared prosperity that will strengthen stability in the international system at a time of turmoil in the global order. He noted that the deal represents a major opportunity for businesses on both sides and will deepen ties between India and Europe.
The EU is already one of India’s largest trading partners. In the 2024 to 2025 financial year, bilateral trade in goods reached approximately 136.5 billion dollars, with Indian exports worth 75.9 billion dollars and imports at 60.7 billion dollars. Services trade added another 83.1 billion dollars, underscoring growing importance of cross border digital, professional and business services.
Indian Commerce and Industry Minister Piyush Goyal said the FTA secures unprecedented market access for Indian exporters, with more than 99 percent of India’s exports by value gaining access to the EU market. He added that the deal goes beyond tariffs, embedding strategic, technological and mobility dimensions that support India’s long term competitiveness.
The agreement eliminates tariffs on nearly 33 billion dollars worth of Indian exports once it enters force. Labour intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods and automobiles are expected to be among the biggest beneficiaries.
Indian officials say the pact strengthens the Make in India agenda by integrating domestic manufacturers more deeply into global value chains, while supporting employment for workers, artisans, women and small businesses.
EU tariffs on Indian products currently averaging 10 percent on goods will be eliminated or reduced for 96.6 percent of EU goods exports to India, according to European Commission officials. The deal will save up to 4 billion euros annually in duties on European products.
Existing Indian tariffs of up to 44 percent on machinery, 22 percent on chemicals and 11 percent on pharmaceuticals will be mostly eliminated. Tariffs on EU aircraft and spacecraft will also be eliminated for almost all products while those on optical, medical and surgical equipment will be eliminated for 90 percent of products.
Tariffs on spirits and wines imported to India from the EU, currently at 150 percent, will be cut to 20 to 30 percent for wines and 40 percent for spirits.
In the automotive sector, a calibrated, quota based liberalisation framework allows European carmakers to introduce higher end models into India, while also opening future opportunities for manufacturing and exports from India to the EU. Consumers are expected to benefit from greater competition and access to advanced technologies.
India’s agricultural and processed food sectors are also set to gain improved access to EU markets, particularly for tea, coffee, spices, fresh produce and processed foods. At the same time, India has protected sensitive sectors such as dairy, cereals, poultry and soymeal, balancing export ambitions with domestic food security and farmer interests.
Services, the fastest growing component of both economies, are a central pillar of the deal. The FTA guarantees predictable, non discriminatory access for Indian service providers across 144 EU subsectors, including Information Technology (IT) and IT enabled services, professional services, education, finance, tourism and construction.
India’s services commitments under this FTA are the most ambitious it has ever undertaken, surpassing concessions granted to partners such as the United Kingdom and Australia. European companies will gain more predictable access to key sectors including financial services, maritime transport and professional services.
The agreement also introduces a structured mobility framework, easing short term business travel, intra corporate transfers and contractual service provision. The EU has committed access in dozens of sectors for Indian professionals, alongside entry and work rights for dependents of intra corporate transferees.
India also secured provisions to engage on social security agreements, support student mobility and post study work opportunities, and allow practitioners of Indian traditional medicine to work under home country qualifications in EU member states where such practices are not regulated.
Beyond tariffs, the pact addresses non tariff barriers through regulatory cooperation, streamlined customs procedures and clearer rules on sanitary, phytosanitary and technical standards.
On climate related trade rules, including the EU’s Carbon Border Adjustment Mechanism (CBAM), India secured commitments on technical cooperation, recognition of carbon pricing systems and support to help exporters meet emerging emissions requirements.
Financial services provisions aim to deepen integration, promote innovation and support cross border electronic payments, while intellectual property chapters reinforce Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) protections.
Officials on both sides said the FTA will support cooperation in artificial intelligence, clean technologies and semiconductors, aligning trade with long term technological and sustainability goals.
The India EU deal becomes India’s 22nd free trade agreement and, alongside recent pacts with the United Kingdom and the European Free Trade Association, effectively opens much of the European market to Indian exporters.
The agreement will now undergo legal revision and translation into all official EU languages. The European Commission will then submit it to the Council and European Parliament for approval. In parallel, India must ratify the deal domestically. Once ratified by both sides, the agreement will enter force, with tariff reductions and regulatory provisions gradually phased in over a period of up to ten years.
The European Commission expects the deal to double EU goods exports to India by 2032, supporting jobs across manufacturing, agriculture and services. For India, the agreement aligns with the Viksit Bharat 2047 vision, intended not only to expand trade but also to anchor a resilient, future ready partnership that supports innovation, job creation and inclusive growth.
The timing of the agreement is particularly significant given growing global trade tensions. United States President Donald Trump has imposed 50 percent tariffs on India and threatened additional tariffs against European countries, disrupting established trade flows and pushing major economies to seek alternate partnerships.
Von der Leyen has accelerated outreach to markets worldwide, signing deals with Japan, Indonesia, Mexico and South America under the catchphrase strategic autonomy, which in practice represents decoupling from excessive dependence on single markets.
India and the EU also announced the launch of a security and defence partnership, similar to partnerships the EU has with Japan and South Korea. The moves come as India has tried to reduce dependence on Russia for military hardware by diversifying imports and pushing domestic manufacturing.
