India and EU clinch landmark free trade agreement billed as the ‘mother of all deals’
After nearly two decades of on-and-off negotiations, India and the European Union have finalised a free trade agreement that would cut or remove tariffs on most traded goods, with major changes for sectors like automobiles, machinery and chemicals. The pact is positioned as both an economic boost and a strategic signal amid shifting global trade alliances.
A long-delayed pact comes together
India and the European Union have concluded a major free trade agreement on 27 January 2026, a deal that leaders on both sides described in unusually sweeping terms. Negotiations had run for years with long pauses, but accelerated recently as both partners looked to deepen economic ties and reduce exposure to global trade uncertainty.
Under the agreement, India will reduce or eliminate tariffs on a large share of EU exports by value, while the EU will also cut tariffs on most Indian goods by value over time. The package covers goods and includes additional cooperation elements linked to mobility and strategic partnership.
Big-ticket tariff shifts: cars, machinery and chemicals
One of the headline provisions is a phased reduction in India’s import duties on European cars—from very high levels to a much lower rate over a defined transition—paired with a quota mechanism. Other areas expected to benefit include machinery and electrical equipment, chemicals and certain industrial inputs, where duties are set to be reduced substantially or removed for many product lines.
For India, the deal is framed as expanding opportunity for key export sectors such as textiles and apparel, leather, engineering goods and other labour-intensive categories. Supporters argue the agreement could expand trade flows and improve predictability for supply chains on both sides.
What happens next
While announced as concluded, the agreement still needs formal approvals through the EU’s ratification process and India’s domestic clearances. Businesses are likely to watch timelines closely, because tariff changes and quota rules only take effect once the agreement enters into force.