Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Jan. 27, 2026. (AP Photo/Manish Swarup)
NEW ORLEANS – India and the European Union (EU) concluded a historic free-trade agreement on Jan. 27, finalizing years of negotiations on a pact covering a combined market of about 2 billion people and roughly one-quarter to one-third of global GDP and trade. “Europe and India are making history today. We have concluded the mother
NEW ORLEANS – India and the European Union (EU) concluded a historic free-trade agreement on Jan. 27, finalizing years of negotiations on a pact covering a combined market of about 2 billion people and roughly one-quarter to one-third of global GDP and trade.
“Europe and India are making history today. We have concluded the mother of all deals,” European Commission President Ursula von der Leyen posted on X.
Trade Deal Specifics
The agreement cuts or eliminates tariffs on the vast majority of goods traded between the EU and India which covers nearly all of their trade as assessed by value. Specifically:
For European exports to India, duties on industrial and many agricultural products (machinery, chemicals, processed foods, wine and spirits) will be phased down, with some tariffs eliminated immediately and others over time.
India will reduce tariffs on European cars from current levels as high as 110% down to around 10% over a staged period, making EU vehicles more competitive in the Indian market.
Indian textiles, engineering goods, marine products, and products from other sectors will see tariff elimination or reduction, with Indian engineering exports projected to rise sharply.
Dairy, livestock and certain cereals remain protected and remain excluded from tariff reductions.
The EU expects that its exports to India could double by 2032 and provide potential savings of around €4 billion annually in duties.
Indian engineering exports are forecast to grow to around $25 billion in just two years following the deal’s implementation.
“This agreement will bring major opportunities for the people of India and Europe,” Indian Prime Minister Narendra Modi said in a virtual address to an energy conference. “It represents 25% of the global GDP and one-third of global trade.”
Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Jan. 27, 2026. (AP Photo/Manish Swarup)
Strategic and Policy Context
The deal is widely seen as a response to heightened global trade tensions including U.S. tariff barriers. It is also seen as a way for both the EU and India to diversify trade ties beyond the United States and China.
“This is the most comprehensive trade deal India has ever signed, which gives European companies a first mover advantage into this market and gives them a strategic upper hand that other players do not,” Garima Mohan, a senior fellow at the German Marshall Fund, told the Associated Press.
It’s not just tariffs that are being negotiated. The deal includes negotiating how services, labor mobility, security cooperation and environmental commitments will work.
A notable outcome of the talks is that the EU’s carbon border tariff regime will remain intact even though India had pushed for more favorable treatment. The EU did not exempt India but agreed to further discussions and offered financial assistance to support Indian emission reduction efforts.
What Comes Next
The agreement still requires ratification by EU member states, the European Parliament, and India’s government before it can fully enter into force, most likely in 2026 or early 2027.
Once ratified, the agreement will eliminate some tariffs immediately while many duties will be reduced gradually over several years.
Happy 504 Day! 🎉
Order a full year of local stories,
delivered to your door.
Limited time offer. New subscribers only.
Follow the issues, companies and people that matter most to business in New Orleans.
