India and the European Union have introduced the conclusion of a long-awaited free commerce settlement (FTA) on January 27, 2026.

The negotiations had been concluded on the India–EU Summit in New Delhi, the place Prime Minister Narendra Modi met with European Fee President Ursula von der Leyen and European Council President António Costa, who had been on a state go to to India following their participation within the nation’s Republic Day celebrations as chief visitors.

In the present day is a day that can be remembered endlessly, marked indelibly in our shared historical past.

European Council President António Costa and European Fee President Ursula von der Leyen and I are delighted to announce the conclusion of the historic India-EU Free Commerce Settlement.… pic.twitter.com/yaSlPm2b2L

— Narendra Modi (@narendramodi) January 27, 2026

Ursula von der Leyen referred to as the deal “Mom of all offers” between two main international economies. She additionally mentioned that nearer EU–India integration may create a market of practically two billion individuals, accounting for near 1 / 4 of world GDP.

Europe and India are making historical past as we speak.

We now have concluded the mom of all offers.

We now have created a free commerce zone of two billion individuals, with each side set to profit.

That is solely the start.

We’ll develop our strategic relationship to be even stronger. pic.twitter.com/C7L1kQQEtr

— Ursula von der Leyen (@vonderleyen) January 27, 2026

The settlement comes at a time when the worldwide commerce is dealing with elevated uncertainty amid renewed tariff pressures from america underneath President Donald Trump.

The European Union is one in all India’s largest buying and selling companions in items and amongst its most vital financial companions total. Bilateral commerce in items stood at about €120 billion in 2024, accounting for roughly 11.5% of India’s whole commerce.

Notably, India ranks because the EU’s ninth-largest buying and selling companion, representing about 2.4% of the bloc’s whole items commerce. Commerce in providers reached €59.7 billion in 2023, practically doubling from €30.4 billion in 2020. EU funding shares in India amounted to roughly €140.1 billion in 2023.

Individually, EU exports to India are estimated to help round 800,000 jobs throughout the European Union.

Negotiations on the FTA, alongside parallel talks on an Funding Safety Settlement and an Settlement on Geographical Indications (GIs), had been formally relaunched in 2022 after a number of years of stagnation.

Whereas leaders initially aimed to conclude talks by the top of 2025, sustained political and ministerial engagement by way of 2025 and early 2026 helped bridge remaining variations, resulting in the conclusion of negotiations on 27 January 2026.

In accordance with the European Fee, that is the most important commerce settlement ever concluded by the EU with a single companion and essentially the most bold commerce pact India has negotiated so far.

Beneath the FTA, India will cut back import duties on most items coming from the European Union over time. Tariffs on roughly 96.6% of EU items exports to India can be eradicated or decreased over time. The European Union estimates that the settlement may doubtlessly double EU items exports to India by 2032 and generate annual responsibility financial savings of round €4 billion for European exporters

Equipment and electrical gear exports, valued at €16.3 billion in 2024 and at the moment topic to tariffs of as much as 44%, will see tariffs decreased to zero for nearly all merchandise over a staging interval of as much as 10 years, with many reductions occurring inside 5 to seven years. Plane and spacecraft exports, value about €6.4 billion, will even be liberalised over staged timelines of as much as 10 years, with a number of tariff strains eradicated earlier.

Tariffs on prescription drugs, chemical substances, plastics, iron and metal, and optical and medical gear can be phased out over durations that largely lengthen as much as 10 years.

Beneath the FTA, India will lower import responsibility on premium automobiles priced above €15,000. The responsibility will first come right down to round 30-35% when the settlement begins, and later cut back additional to 10%. This profit will apply solely to 250,000 automobiles per yr. Automobiles imported past this restrict will proceed to draw the present excessive duties, which go as much as about 110%

Pearls, treasured stones and metals can be topic to partial tariff elimination and reductions throughout product classes.

The settlement additionally delivers expanded market entry for EU agri-food exports, the place Indian tariffs at the moment common round 36% and might attain as excessive as 150%. Tariffs on merchandise equivalent to olive oil, vegetable oils, fruit juices, processed meals, chocolate, pastries and pet meals can be decreased to zero. Wine tariffs, at the moment at 150%, can be lower to twenty% for premium wines and 30% for mid-range wines, whereas tariffs on spirits will fall to 40% and people on beer to 50%.

Delicate agricultural merchandise have been excluded from liberalisation on each side, and the settlement features a bilateral safeguard mechanism to deal with import surges.

In providers, the commitments undertaken by India underneath the FTA exceed these it has made in any earlier commerce settlement, together with these with the UK and Australia.

For the primary time, India has certain commitments in areas equivalent to dredging and maritime cable-laying providers. The settlement additionally contains provisions on transparency necessities for senior administration and boards, strengthened mental property protections, and a devoted chapter aimed toward supporting small and medium-sized enterprises.

On the EU aspect, the EU will take away import responsibility on about 90% of Indian items and this can improve to round 93% inside 7 years. This implies many Indian exports like textiles, leather-based, gems & jewelry and seafood will get near-zero responsibility entry into the EU market.

Some delicate merchandise have been saved exterior the settlement. On the EU aspect, gadgets like sure agricultural merchandise equivalent to dairy, rice and sugar are excluded from tariff cuts.

Parallel negotiations on funding safety goal to determine safeguards in opposition to expropriation with out compensation, guarantee non-discriminatory remedy of traders, and create a contemporary dispute settlement mechanism, whereas preserving all sides’s proper to control within the public curiosity.

The Geographical Indications Settlement, as soon as concluded, is predicted to guard conventional merchandise and help rural communities in each India and the EU.

In recent times, India’s items exports to the EU have usually ranged between roughly $70 billion and $80 billion yearly, with imports from the bloc considerably decrease, relying on the yr.

In accordance with the studies, EU have sought stronger outcomes on mental property and data-related guidelines, whereas India has raised considerations over the EU’s Carbon Border Adjustment Mechanism (CBAM), arguing that it may perform as an extra border cost on carbon-intensive exports and disproportionately have an effect on micro, small and medium-sized enterprises.