India and the EU signed a historic trade agreement

In New Delhi, Prime Minister Narendra Modi, President of the European Council Antonio Costa and President of the European Commission Ursula von der Leyen finalized the free trade agreement on 27 January, 2026. This agreement was described as the mother of all agreements.

• India and the European Union (EU) finalized the free trade agreement on 27 January, 2026. In New Delhi, delegation-level talks were held between Prime Minister Narendra Modi, President of the European Council Antonio Costa and President of the European Commission Ursula von der Leyen.
• The EU and India first started talks for a free trade agreement in 2007. The talks were suspended in 2013 and then resumed in 2022. The 14th and final formal round of talks took place in October, 2025, after which inter-session discussions were held at technical and political levels.
• Earlier, Prime Minister Narendra Modi and the President of the European Commission, Ursula von der Leyen, had described this agreement as the mother of all agreements. Thanks to this historic trade agreement, markets of about 2 billion people have been connected together.
• India and the European Union exchanged seven agreements including trade, security, defence partnership, mobility, disaster risk management and green hydrogen.
• The Prime Minister said that India has today, on 27 January, 2026, concluded its biggest free trade agreement with the 27-nation European Union. He said that this will boost investment, create new innovation partnerships and strengthen the supply chain at the global level.
• At the 16th India-European Union Summit held in New Delhi on 27 January, 2026, India and the European Union announced the conclusion of the long-pending free trade agreement talks. This historic agreement covers about 25% of global GDP, and strengthens trade, defence and green cooperation.

Key facts

• The EU and India already trade more than €180 billion worth of goods and services every year, creating about 800,000 EU jobs.
• From this deal, by 2032 India is expected to double its exports of goods to the EU, due to which tariffs will be eliminated or reduced on 96.6% of India’s exports of goods to the EU. Overall, the reduction in tariffs will save about €4 billion every year in duties on European products.
• This is the biggest trade opening ever given by India to any trade partner. This will give the EU’s specific industrial and agri-food sectors a significant competitive advantage, giving companies special access to the world’s most populous country, whose population is 1.45 billion and which is the fastest growing large economy, with an annual GDP of €3.4 trillion.
• India will give tariff concessions to the EU that it has not given to any of its other trading partners. For example, tariffs on cars will be gradually reduced from 110% to as low as 10%, while tariffs on car parts will be completely eliminated after five to ten years.
• Tariffs of up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will also mostly be eliminated.
• A big market opens up for European farmers. For example, the Indian tariff on wine will be reduced from 150% to 75% and eventually it will be reduced to as low as 20%, the tariff on olive oil will be reduced from 45% to 0% in five years, while tariffs of up to 50% on processed agricultural products like bread and confectionery will be eliminated.
• Sensitive European agricultural sectors will be fully protected, as the agreement excludes products like beef, chicken meat, rice and sugar from liberalisation. All Indian imports will continue to comply with the EU’s strict health and food safety rules.
• This agreement provides a high level of protection and enforcement of intellectual property (IP) rights, including copyright, trademarks, designs, trade secrets and plant variety rights.
• The EU and India will also sign a memorandum of understanding with the intention of establishing an EU-India platform for cooperation and support on climate action. This platform will be launched in the first half of the year 2026.

European Union

• In 1951, France, West Germany, Italy, Belgium, the Netherlands and Luxembourg established the ‘European Coal and Steel Community’ (ECSC). After the Maastricht Treaty came into force in 1993, it officially became the European Union (EU).
• After the Second World War (1939-45), it was established in 1951 by six countries (Belgium, France, Germany, Italy, Luxembourg and the Netherlands).
• Current member countries: At present it includes 27 countries (Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain and Sweden).
• Britain joined the European Union in 1973 and left it in the year 2020 (Brexit).
• In the European Union, Germany has the largest population and France is the largest in terms of area, while the smallest country is Malta.
• Except Cyprus and Ireland, free movement is permitted in the Schengen area for most members of the European Union.
• Four non-European Union countries (Iceland, Norway, Switzerland and Liechtenstein) are also part of Schengen.