THEBUSINESSBYTES BUREAU

NEW DELHI, JANUARY 25, 2026

After nearly two decades of negotiations, India and the European Union are set to announce the conclusion of talks and finalisation of a long-awaited free trade agreement on January 27, marking a defining moment in bilateral economic relations and global trade realignments. The announcement will be made at the India–EU Summit in New Delhi, reflecting a shared urgency to deepen cooperation amid disruptions in global trade triggered by steep US tariffs.

Commerce and Industry Minister Piyush Goyal has described the agreement as the “mother of all deals” signed by India so far, underscoring its scale and strategic significance. Negotiations for the pact began in 2007 and have navigated multiple global economic cycles before reaching the finishing line after 18 years. An official said while the closure of talks will be declared this week, the formal signing will take place after legal vetting of the text on a mutually agreed date. Implementation could take additional time, as the agreement requires approval from the European Parliament, while in India it will need the nod of the Union Cabinet.

The summit will bring together Prime Minister Narendra Modi, European Commission President Ursula von der Leyen, who arrived in India on January 24 for a four-day visit, and European Council President Antonio Costa. Their talks are expected to emphasise trade, investment, technology and supply chain resilience.

Under the proposed FTA, India and the 27-nation EU bloc will reduce or eliminate import duties on over 90 per cent of goods traded between them. For several labour-intensive sectors such as textiles and footwear, duties are expected to be eliminated immediately upon implementation, while others will see phased reductions over five, seven or ten years. The agreement will also liberalise trade in services, easing norms across sectors like telecommunications, transportation, accounting and auditing, alongside quota-based market access for select products.

India’s agreement with the EU will be its biggest trade pact to date, given the bloc’s composition of 27 developed economies including France, Germany, Italy, Spain, the Netherlands, Sweden and Belgium. The pact assumes greater importance as high US tariffs, including rates as steep as 50 per cent on some Indian goods, have disrupted global trade flows. The FTA is expected to help Indian exporters diversify markets, reduce dependence on China and integrate more deeply into European value chains.

The EU currently accounts for around 17 per cent of India’s total exports, while exports to India make up about 9 per cent of the bloc’s overseas shipments. In 2024-25, bilateral trade in goods stood at USD 136.53 billion, with India exporting USD 75.85 billion and importing USD 60.68 billion, making the EU India’s largest goods trading partner. Services trade touched USD 83.10 billion in 2024.

India is seeking zero-duty access for labour-intensive sectors such as textiles, leather, handlooms and select processed foods. The EU, in turn, is keen on greater access for automobiles, wines and high-tech manufacturing. Sensitive agriculture issues have been kept outside the deal, with both sides protecting key farm and dairy interests. Dairy, in particular, remains excluded from all Indian FTAs to safeguard small and marginal farmers.

Beyond trade, the agreement is expected to boost investment ties. The EU is already a major investor in India, with cumulative FDI inflows of USD 117.4 billion between April 2000 and September 2024, accounting for over 16.5 per cent of total FDI equity inflows. Around 6,000 EU firms operate in India, while Indian companies have invested over USD 40 billion in the EU, highlighting the depth and future promise of this landmark partnership.