New Delhi/Brussels – After nearly two decades of negotiations, the European Union and India have successfully concluded a long-awaited free trade agreement, reaching a political deal widely described as one of the largest trade accords in the world. The formal announcement was made during the 16th EU-India Summit in New Delhi.

Indian IT components, machinery, and electrical engineering; organic chemicals and pharmaceutical products such as generics; petroleum products, iron, and steel; precious stones and jewelry, yarns, fabrics, and clothing; services such as IT and telecommunications services, business services, and transportation services are imported into the EU, while automotive industries, mechanical engineering, wine, and olive oil are imported into India.

What was agreed?

The agreement provides for the reduction or elimination of tariffs on a large majority of goods and aims to dismantle trade barriers between the 27-member EU bloc and India. According to sources close to the negotiations, tariffs on more than 90% of traded goods will be significantly reduced or fully abolished, including those on automobiles, textiles, machinery, as well as spirits and wine.

India’s import duties on European cars, currently exceeding 100%, will be gradually reduced to around 10%, while the EU will also lower or offset tariffs on many Indian products.

Significance and objectives

Trade between the EU and India —two major economic blocs representing more than two billion people and around a quarter of global economic output— is expected to grow substantially in the coming years. Experts and government officials estimate that bilateral trade could reach approximately USD 200 billion by 2030.

European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi described the agreement as a “milestone” in global trade policy, sending a strong signal in favor of open markets and multilateral trade at a time of rising protectionist tendencies elsewhere.

Strategic context

Beyond its economic importance, the agreement is also seen as a geopolitical signal. Both sides aim to deepen economic cooperation and reduce dependencies on third countries. The EU is simultaneously expanding partnerships with other regions, including Mercosur and Southeast Asia, while India is pursuing greater diversification of its export markets.

Key elements

The main components of the agreement include:

-Reduction of tariffs on industrial and manufactured goods on both sides

-Liberalisation of services and investment protection to improve market access for European and Indian companies

-Phased implementation, as the agreement is still subject to legal review and ratification, including by the European Parliament and the Indian government

Sensitive sectors such as agriculture are partially excluded or only limitedly integrated, reflecting domestic political concerns, particularly in India.

Which Indian products will enter the EU?

-Technology and industry: electronics, machinery, automotive components

-Chemicals and pharmaceuticals: organic chemicals, medicines, and generics

-Raw materials and other goods: refined petroleum products, iron and steel, precious stones and jewelry, coffee

-Labor-intensive goods: textiles, clothing, and leather goods

-Services: IT, telecommunications, business services, and transportation

Reactions

European business representatives welcomed the deal as an “important step for exporters,” particularly in sectors such as automotive manufacturing, mechanical engineering, wine and olive oil.

Prime Minister Modi stressed that the agreement not only delivers economic benefits for both sides but also strengthens strategic cooperation in the 21st century.

Outlook

Although negotiations have formally concluded, the agreement still requires legal review and ratification by the relevant parliaments —a process expected to take several months before entry into force.

The expectation is that the trade agreement will become effective by 2027 at the latest, significantly deepening economic ties between the EU and India in the years ahead.

By Okay Altinisik | 27-1-2026, 11:21:09