STORY
The European Union and India have concluded negotiations for a free trade agreement on 27 January 2026, ending an 18-year period of discussions that began in 2007. The agreement establishes a trade zone covering two billion people and representing approximately 25% of global GDP. It is expected to enter into force in early 2027 following legal review and parliamentary ratification. The pact aims to remove or reduce duties on over 90% of EU goods exported to India, with projected annual duty savings for EU exporters of up to €4 billion.
Under the terms of the deal, India will reduce import duties on European automobiles from 110% to 10% for an annual quota of 250,000 vehicles. Tariffs on European wines, currently at 150%, will drop to 75% upon implementation and eventually reach 20% for premium ranges. Other significant reductions include spirits (cut to 40%), beer (cut to 50%) and the elimination of duties on machinery, chemicals and pharmaceuticals. In exchange, the EU will provide zero-duty access for over 99% of Indian exports by value, benefiting sectors such as textiles, leather, gems and jewellery.
The agreement includes provisions beyond trade in goods, such as a dedicated chapter for small and medium enterprises (SMEs) and enhanced intellectual property protections. It also outlines €500 million in EU support over the next two years to assist India in reducing greenhouse gas emissions. US Treasury Secretary Scott Bessent criticised the timing of the deal, noting that the United States maintains 25% tariffs on India for its continued purchase of Russian oil. Despite these external tensions, the agreement is projected to double the value of EU-India trade by 2032.