After almost 20 years of talks, India and the European Union signed a historic free trade agreement (FTA) on January 27, 2026. This created a free trade zone for two billion people that covers a quarter of the world’s GDP. During the India-EU summit in New Delhi, Prime Minister Narendra Modi called it the “mother of all deals” and promised that it would open up many new opportunities for India’s 1.4 billion people and EU residents. Ursula von der Leyen, the President of the European Commission, said the same thing, saying it strengthens strategic ties in a world full of uncertainty.
The deal cuts or gets rid of tariffs on 96.6% of EU exports to India, which saves up to €4 billion ($4.75 billion) a year in duties. It also cuts tariffs on almost 99% of Indian shipments to the EU. Goods from Europe, such as cars (tariffs cut by up to 110%), beer, machinery, chemicals, drugs, iron, steel, and food, will be cheaper in India. This lets EU industries into India’s protected market and helps Indian exports of textiles and services that need a lot of workers.
There will be a formal signing after a 5- to 6-month legal review, and the plan is to put it into action within a year. In FY2025, trade between the two countries reached $136.5 billion. The FTA will improve investment, innovation, supply chains, defense ties, and clean energy cooperation. Experts say it protects against US tariff risks, making the EU India’s best partner for technology and markets.
