Historic India–EU Free Trade Agreement: All You Need to Know About the ‘Mother of All Deals’
India and the European Union finalise a landmark Free Trade Agreement (FTA) set to reshape economic ties, cut tariffs on most traded goods and create new opportunities for trade and investment
January 27, 2026 — India and the European Union (EU) have agreed on a historic Free Trade Agreement (FTA) after nearly two decades of negotiations, in what is being described by leaders as the “mother of all deals.” This landmark agreement, finalised during the India–EU Summit in New Delhi, is expected to significantly boost economic ties between the world’s fifth-largest and third-largest economies.
Major Highlights of the India–EU FTA
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The deal aims to eliminate or sharply reduce tariffs on a large majority of traded goods between India and the EU, covering approximately 96% of trade by value. This is expected to double EU exports to India by 2032.
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European wines, spirits like beer, and olive oil are projected to become more affordable for Indian consumers as high tariffs are cut.
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European luxury cars, machinery and chemical products will see significant tariff reductions, with some levies falling from very high levels to much lower rates over time.
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Key Indian export sectors such as textiles, gems & jewellery, leather and pharmaceuticals stand to gain improved market access into the EU.
According to trade reports, this agreement could save around €4 billion annually in tariffs for European exporters and create a more integrated trade relationship between the two regions.
Why the Deal Matters
Leaders from both sides called the FTA a major milestone in global trade. EU Commission President Ursula von der Leyen described the agreement as historic and praised the potential for shared prosperity. Indian Prime Minister Narendra Modi termed it the biggest free trade deal in India’s history, signaling deeper economic and strategic ties with the EU.
The pact is expected to enhance not only trade in goods but also services, investment flows and supply chain integration, helping reduce trade barriers and strengthen economic cooperation across sectors.
Next Steps
While the negotiations have been successfully completed and the deal finalised, the agreement still requires ratification by the European Parliament, EU member states and India’s cabinet before coming into force. Once approved, it could come into effect in the coming year, laying the foundation for a new chapter in India–EU economic relations.
