After almost 20 years of negotiations, the India EU Free Trade Agreement has been concluded, a historic milestone known as the “mother of all deals.” The India-EU trade agreement, which was unveiled in New Delhi on January 27, 2026, establishes an immense free trade zone that includes around 2 billion people and almost 25% of the world’s GDP. In the face of uncertain global commerce, leaders from both sides emphasized its potential to improve economic relations, drastically lower tariffs, and solidify geopolitical relationships.
Historic ‘Mother of All Deals’ Finalized
In a post on X and during remarks in New Delhi, Ursula von der Leyen, the president of the European Commission, referred to the broad India EU Free Trade Agreement as the “mother of all deals.” According to Indian Prime Minister Narendra Modi, it is a historic agreement that “represents 25% of the global GDP and one-third of global trade” and “will bring major opportunities for the people of India and Europe.”
The agreement intends to facilitate free trade between India and the 27 member states of the EU on nearly all items. Significant tariff reductions, increased defense and security cooperation, and agreements to support skilled workers’ and students’ mobility are all part of it.
US Pressure Propels India-EU Trade Deal
Increased U.S. tariffs on imports from both India and the EU during the present administration gave the push toward the India EU trade deal more momentum. Major economies are looking for alternate relationships as a result of these measures, which include additional charges related to issues such as energy purchases and other conflicts.
Modi stated that the collaboration “will strengthen stability in the international system” amid “turmoil in the global order” at a joint news conference in New Delhi with von der Leyen and European Council President António Costa. “Europe and India are making history today,” Von der Leyen continued. “We have reached the mother of all deals,” he said, describing it as a “true win-win” collaboration between “two giants” that signals cooperation as a response to global challenges.
Deal to Cut Tariffs and Ease Regulatory Barriers
India will reduce or remove duties on 96.6% of EU exports under the terms, and the EU will gradually implement comparable cuts on over 99% of Indian shipments by trade value. This is anticipated to generate jobs on both sides and save exporters up to 4 billion euros ($4.7 billion) in tariffs yearly.
Textiles, clothing, engineering goods, leather, handicrafts, footwear, and marine items are important Indian industries that stand to gain. Gains are expected for the EU in the automobile, wine, chemical, and pharmaceutical industries. India’s tariffs on EU automobiles will be gradually reduced from 110% to as low as 10%, vehicle parts will be completely eliminated over a period of five to ten years, and there will be reductions in machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%).Tariffs on high-end European wines will decrease from 150% to 20%. Wines, whisky, and automobiles have all been subject to quota schemes.
Citing domestic sensitivities, India has excluded cereals and dairy goods (milk and cheese) from concessions. Indian sugar, meat, poultry, and beef have not been given preferential access by the EU.
It is anticipated that the EU Free Trade Agreement with India will improve joint production, strengthen supply chain integration, and encourage economic diversification for both parties.
Offsetting Impact of Higher US Tariffs
In reaction to increased U.S. tariffs, which include combined rates of up to 50% on some items, the agreement encourages India to diversify its export markets. Increased access to one of the fastest-growing economies in the world helps the EU become less dependent on unpredictable markets.
With goals to reach $200 billion by 2030, bilateral trade was $136.5 billion in 2024–2025.Trade analyst Ajay Srivastava noted, “Ultimately, the agreement is about creating a stable commercial corridor between two major markets at a time the global trading system is fragmenting.”
Formal signing is expected later in 2026, after legal reviews, translations, approval by the EU Parliament and Council, and ratification by India. Indian Commerce Minister Piyush Goyal said that the agreement could go into effect by the end of 2026.
Finally, the India EU Free Trade Agreement, termed the ‘Mother of All Deals’, is an essential move toward stronger economic and strategic alignment between two major global players, supporting mutual prosperity and resilience in an ever-changing trade landscape.
