In a landmark development on January 27, 2026, India and the European Union concluded negotiations on a comprehensive Free Trade Agreement (FTA), hailed as the “mother of all deals” by European Commission President Ursula von der Leyen.
Prime Minister Narendra Modi announced the historic pact, describing it as India’s biggest-ever trade deal, covering 25% of global GDP and one-third of global trade, and creating a free trade zone for nearly 2 billion people.
Key highlights of the agreement include:
Elimination or sharp reduction of tariffs on 96.6% of traded goods by value.
India’s tariffs on EU cars to drop significantly (from up to 110% to as low as 10% over time).
Benefits for EU exports in autos, wines, spirits, machinery, chemicals, and pharmaceuticals.
Boost for Indian exports in textiles, gems, jewellery, pharmaceuticals, and leather goods.
Expected to double EU exports to India by 2032 and save European firms around €4 billion in duties annually.
The deal, after nearly two decades of on-and-off talks (suspended in 2013 and revived in 2022), comes amid global trade tensions and aims to diversify supply chains away from over-reliance on any single partner.
Analysts view it as a strategic setback for the United States, especially under the current administration’s tariff-heavy approach. The pact allows India and the EU to deepen ties independently, countering US pressures (such as tariffs on Indian goods linked to Russian oil purchases). US officials have criticized the move, with one senior aide claiming Europe is “funding war against themselves” while the US imposes stricter measures.
Formal signing is expected later in 2026 after legal reviews, with potential entry into force in 2027. This mega-deal strengthens India-EU economic and geopolitical alignment in a multipolar world.
