After nearly two decades of negotiations, India and the European Union have reached a landmark free trade agreement (FTA) that is being hailed as one of the most significant trade deals in recent history. The announcement was made on Tuesday at the 16th India-EU Summit in New Delhi, with leaders from both sides underscoring the pact’s potential to reshape global trade.
Indian Prime Minister Narendra Modi and senior EU officials, including European Commission President Ursula von der Leyen and European Council President António Costa, jointly confirmed that the agreement has been finalized after protracted talks that began in 2007. The deal covers a vast economic area that collectively represents roughly a quarter of global GDP and about one-third of global trade.
Deep Market Access and Tariff Reductions
The agreement is designed to liberalize trade across goods and services, investment, and broader economic cooperation. Tariffs on more than 90 % of goods traded between India and the EU are expected to be reduced or eliminated gradually, boosting market access for exporters on both sides. European exports to India, including automobiles, machinery, chemicals and pharmaceuticals, are set to benefit significantly from tariff reductions. Indian exports such as textiles, leather, gems and jewellery will also gain preferential access to the EU market.
One high-profile component of the deal is the phased reduction of India’s steep import duties on European cars. Tariffs on many European vehicles, which currently can exceed 100 %, are expected to fall sharply — potentially to as low as 10 % over time — opening India’s fast-growing auto market to European manufacturers.
Strategic and Economic Implications
Officials described the pact as more than a conventional trade deal. European leaders characterized it as the “mother of all deals,” noting that it will create one of the world’s largest free trade areas, with benefits for almost two billion consumers. The agreement is also being viewed as a strategic response to rising global trade tensions, including U.S. protectionist measures, and as part of a broader effort to diversify economic partnerships.
While the core of the agreement has been finalized, formal signing is expected later in 2026 following legal review and ratification by relevant bodies, including the European Parliament and India’s Union Cabinet. Implementation could begin in early 2027 once all approvals are secured.
The agreement marks a major milestone in ties between India and the EU, laying the groundwork for closer economic integration and cooperation in trade, investment, and beyond.
