On Tuesday (27 January), the EU and India officially concluded negotiations on a landmark Free Trade Agreement in New Delhi. Following nearly two decades of discussions that first began in 2007, EU and Indian leaders met at the 16th India-EU Summit to finalise what is being called the “mother of all agreements”. This historic pact creates a unified market of two billion people, representing roughly one-quarter of the world’s economic output. The deal seeks to bolster economic ties, support growth and reaffirm a shared commitment to open, rules-based trade.
New horizons for European industry and agriculture
For European businesses, this agreement unlocks the doors to the world’s most populous nation and its fastest-growing large economy. Currently, the two partners trade over €180 billion in goods and services annually, a figure expected to skyrocket as the deal eliminates or reduces tariffs on over 96% of EU exports. European Commission President Ursula von der Leyen hailed the achievement, stating:
“The EU and India make history today, deepening the partnership between the world’s biggest democracies. We have created a free trade zone of 2 billion people. We have sent a signal to the world that rules-based cooperation still delivers great outcomes.”
The impact on specific sectors will be transformative. European car manufacturers, previously facing daunting 110% duties, will see tariffs on vehicles drop to as low as 10% (with a quota of 250,000 cars per year). Farmers also stand to gain significantly; the prohibitive 150% tariff on European wines will eventually fall to 20%. Furthermore, duties on olive oil (currently 45%) and processed foods like biscuits and chocolate (up to 50%) will be completely abolished. To ensure stability, the EU has maintained protections for its most sensitive agricultural products, such as beef and sugar, which are excluded from the liberalisation.
And for Indian businesses?
On the Indian side, the FTA provides a crucial competitive edge for labour-intensive industries. Sectors such as textiles, leather, gems, jewellery, and footwear, which employ millions of workers, will gain preferential access to the European market. This is particularly vital for Indian exporters who have faced higher costs since the withdrawal of previous tariff concessions in 2023. In exchange for this access, India has committed to aligning more closely with international standards on Intellectual Property, making it safer and easier for companies to trade in high-tech goods and services.
The agreement also breaks new ground in environmental and social cooperation. A dedicated “Trade and Sustainable Development” chapter focuses on climate action and workers’ rights. To support this transition, the EU plans to provide €500 million over the next two years to assist India in reducing greenhouse gas emissions and modernising its industrial base.
Next steps
While the negotiations have concluded, the agreement is not yet legally binding. The draft negotiated texts will now undergo legal review and translation, followed by approval from EU Member States and ratification by the European Parliament. If all goes to plan, the deal could enter into force in 2027.
