After nearly 20 years of stalled negotiations, India and the EU have concluded talks for a historic free trade agreement set to be announced on January 27, 2026. Dubbed the "mother of all deals," this pact will reshape trade between a market of 2 billion people accounting for almost a quarter of global GDP.
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๐๐๐๐ผ ๐ฆ๐ฒ๐ฐ๐๐ผ๐ฟ ๐๐ฟ๐ฒ๐ฎ๐ธ๐๐ต๐ฟ๐ผ๐๐ด๐ต:
India has agreed to drastically cut import duties on European cars from current rates of 70-110% down to 40% initially, with a gradual reduction toward 10% over time. This applies to around 200,000 internal combustion engine vehicles annually priced above โฌ15,000. Battery electric vehicles are excluded for the first five years to protect domestic manufacturing investments. This opens India's heavily protected auto market to brands like Volkswagen, Mercedes-Benz, and BMW.
๐ช๐ต๐ฎ๐ ๐๐ป๐ฑ๐ถ๐ฎ ๐๐ฎ๐ถ๐ป๐ ๐ฎ๐ณ:
India is seeking better market access for textiles, garments, leather, gems and jewellery, engineering goods, and processed foodsโsectors that lost tariff advantages after the EU withdrew concessions under its Generalised System of Preferences in 2023. The deal also aims for smoother regulatory pathways for pharmaceuticals and chemicals, easier access for IT and professional services, simplified movement of skilled workers, and relief from double social security contributions. Agriculture and dairy remain excluded to protect domestic farmers.
๐ช๐ต๐ฎ๐ ๐๐ต๐ฒ ๐๐จ ๐๐ฒ๐๐ ๐ช๐บ:
European wines and spirits currently facing duties of 150-200% will see phased tariff reductions. High-end cars, machinery, chemicals, medical devices, and electrical equipment will benefit from lower tariffs and eased regulatory barriers. The EU is also seeking clearer rules on services, procurement, intellectual property, labor and environmental standards, plus stronger investment protections and opportunities in India's manufacturing, clean energy, and digital infrastructure sectors.
๐จ๐ป๐ฟ๐ฒ๐๐ผ๐น๐๐ฒ๐ฑ ๐๐๐๐๐ฒ๐ โ ๏ธ:
India is resisting EU demands to eliminate tariffs on more than 95% of goods, signaling closer to 90% instead. A major concern is the EU's Carbon Border Adjustment Mechanism (CBAM), which could impose a 20-35% levy on carbon-intensive exports like steel, aluminium, and cement from 2026. Whether India secures relief remains unresolved. Non-tariff barriers including stringent standards and certification costs are another sticking point.
๐ง๐ถ๐บ๐ฒ๐น๐ถ๐ป๐ฒ ๐ :
Negotiations concluded on January 25, 2026, with formal announcement on January 27. Legal scrubbing of the text is underway, with signing expected within 5-6 months. Ratification by the European Parliament will take another 6+ months, meaning the deal may enter into force in early 2027. This will be India's eighth trade agreement in five years.
๐ช๐ต๐ ๐ก๐ผ๐?:
Both sides see strategic value amid global trade disruptions and rising protectionism. The agreement comes as supply chains are reconfigured, dependence on China is reassessed, and the US pursues protectionist tariff policies. The EU is India's largest trading partner, with bilateral trade at $136.53 billion in FY25.
