India and the European Union (EU) on Tuesday (January 27, 2026) announced the conclusion of negotiations over a free trade agreement (FTA) that would see the EU drop tariffs on 99.5% of items India exports to the region, with most tariffs going down to 0% immediately once the agreement comes into effect.
India, on the other hand, has given tariff concessions on 97.5% of the traded value between the two economies.
India-EU Summit updates on January 27, 2026
Commerce Minister Piyush Goyal and European Commissioner for Trade and Economic Security Maroš Šefčovič on Tuesday signed the joint announcement on the conclusion of the negotiations on the FTA, in the presence of Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, as well as President of the European Council António Costa.
The conclusion of negotiations on the FTA marks the end of a two-decades-old process, after talks were first launched in 2007. Following several hiccups and pauses to the talks, they were resumed in 2022 with both sides agreeing to exclude issues on which agreement had been elusive.
According to officials in the Ministry of Commerce and Industry, the language in the document will first be cleaned up over the next 10-15 days, following which it will undergo “legal scrubbing”. It is only then that it will be sent to all 27 EU member states after being translated, before it is ratified by the European Parliament.
‘Mother of all deals’
“Today, India has concluded the largest Free Trade Agreement in its history,” Mr. Modi said in his statement. “This historic agreement will facilitate access to the European market for our farmers and small industries, create new opportunities in manufacturing, and strengthen cooperation in our services sectors.”
Ms. von der Leyen also hailed the historic nature of the deal.
“We have delivered the mother of all deals,” she said in her statement. “We are creating a market of 2 billion people. This is a tale of two giants — the world’s second- and fourth-largest economies. Two giants who choose partnership, in a true win-win fashion. A strong message that cooperation is the best answer to global challenges.”
Both sides, however, made sure to exclude their respective sensitive sectors. India, for example, made sure to exclude strategic agricultural sectors as well as dairy. The EU will maintain its current tariffs on its sensitive products such as beef, sugar, rice, chicken meat, milk powder, honey, bananas, soft wheat, garlic, and ethanol.
What India gains
According to the Ministry of Commerce and Industry, India has gained tariff reductions across 97% of tariff lines, covering 99.5% of trade value. Of this, 90.7% of India’s exports will see duties eliminated entirely on day 1 of the deal being implemented. This will include labour-intensive sectors such as textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery and certain marine products, amongst others.
Another 2.9% of India’s exports will see duty elimination over 3-5 years, which would include certain marine products, processed food items, and arms and ammunition. Over and above this, 6% of India’s exports will see tariff reductions including certain poultry products, preserved vegetables, bakery products, amongst others.
“Key labour-intensive sectors [such as textiles, apparel, marine, leather, footwear, chemicals, plastics/rubber, sports goods, toys, gems, and jewellery], comprising more than ₹2.87 lakh crore [$33 billion] of exports that are currently subjected to import duty between 4% to 26% in the EU and are crucial for employment generation, will enter zero duty from entry into force of the FTA and thus gain enhanced competitiveness in the EU market,” the Ministry said in a release.
In particular, of the sectors that India primarily exports to the EU, the following will see duties eliminated entirely: marine products (current duties of up to 26%), chemicals (12.8% currently), plastic and rubber items (6.5%), leather footwear (17%), textiles and apparel (12% each), base metals (10%), gems and jewellery (4%), furniture and allied consumer goods (10.5%), and toys and sports goods (4.7%).
On services, the EU has agreed to commitments across 144 services subsectors, including IT/ITeS, professional services, education, and other business services.
What India has conceded
Overall, India is offering duty elimination and reductions on 92.1% of the tariff lines, which comprises 97.5% of the EU exports to India. Within this, 49.6% of the tariff lines will see an immediate duty elimination once the agreement comes into effect.
Another 39.5% of the tariff lines will be subject to a phased elimination of tariffs over 5, 7, and 10 years. An additional 3% of products will see phased tariff reductions.
“Imports of EU’s high technology goods are expected to diversify India’s import sources, thereby reducing input costs for businesses, benefit consumers and will create opportunities for Indian businesses to integrate into global supply chains,” the statement added.
Notably for the EU, the following European sectors will see duty-free access to the Indian markets: machinery and electrical equipment, aircraft and spacecraft, optical, medical and surgical equipment, plastics, precious stones and metals, chemicals, motor vehicles, iron and steel, pharmaceuticals, and various agricultural products.
On services, India has agreed to open up 102 subsectors covering EU priorities such as professional, business, telecommunications, maritime, financial, and environmental services.
Problematic sectors addressed
It has been learnt that negotiations over a few sectors such as automobiles and wine had caused some problems, but that the two sides finally agreed to quota based systems that were satisfactory to both sides.
India agreed to allow European cars above Rs 25 lakh in price to be imported at lower duties of as low as 10%, from the current 110%, but subject to a quota. These automobiles above Rs 25 lakh will be divided into three buckets, based on their price levels.
For those in the lowest bucket, where Indian manufacturers have a presence, the quota for European companies would be the lowest. The higher the price level, the higher the quota for the European makers.
On wine, too, India agreed to lowering the duty from the current 150% to 20-30% depending on the price of the wine, and subject to quotas.
