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India and the European Union have agreed on January 27, 2026, a historic free trade agreement (FTA) covering almost two decades of on-and-off negotiations starting in 2007 and failing in 2013 due to market access and regulatory disagreements. Restarted in 2021 and expedited amid global geopolitical changes—including Russia's attack of Ukraine and U.S. tariff pressures—European Commission President Ursula von der Leyen called the agreement "mother of all deals." With formal signing anticipated after legal review in 5-6 months and implementation within approximately a year, it establishes a large free trade zone covering two billion people and somewhat a quarter of worldwide GDP.
The agreement cuts or abolishes tariffs on 96–97% of EU products exports to India (by value), perhaps saving European businesses €4 billion annually in customs and doubling EU exports to India by 2032. Key concessions include lowered tariffs on EU machinery, chemicals, pharmaceuticals, cars, and spirits; India gets specific benefits for its exports like textiles, gems, and pharmaceuticals—not extended to other countries. Beyond trade, the agreement includes provisions on climate action, labor rights, women's empowerment, and new collaborations in security, defense, semiconductors, artificial intelligence, and 6G technology, hence strengthening bilateral ties going back to 1962.
India is a major EU market for technology and investment under this historical agreement, which also helps Europe diversify supply chains and hedge against U.S. trade volatility. Current bilateral trade is about €120 billion, and the FTA is set to greatly enhance economic collaboration in a changing worldwide environment.
