In a historic breakthrough after 18 years of negotiations, Prime Minister Narendra Modi and European Union leaders officially announced the conclusion of the India-EU Free Trade Agreement (FTA) today, January 27, 2026. The signing took place at Hyderabad House during the 16th India-EU Summit, following the EU leaders’ role as Chief Guests for India’s 77th Republic Day.
The Economic Powerhouse: 25% of Global GDP
Hailed by Commerce Minister Piyush Goyal as the “Mother of All Deals,” the agreement creates a combined market of 1.9 billion people and accounts for a quarter of the world’s GDP.
| Sector | Key Agreement Outcome |
| Textiles & Leather | Zero-duty access to the 27-nation EU market, ending the disadvantage against competitors like Bangladesh. |
| Gems & Jewellery | Removal of current 2.5% to 4% import duties; expected to double trade in this sector to $10 billion. |
| Automobiles | India to slash tariffs on EU cars from 110% to 40% (for high-end models), with further phased reductions. |
| Wines & Spirits | Significant tariff cuts; India offered a quota-based reduction similar to its deal with Australia. |
| Services | Liberalization of norms for telecommunications, transport, accounting, and auditing. |
Beyond Trade: Strategic & Defense Shift
The summit also produced a Security and Defense Partnership (SDP), marking a departure from traditional trade-only engagement.
- Defense Industrial Ties: The deal opens doors for Indian companies to participate in the EU’s €150 billion SAFE (Security Action for Europe) program.
- Professional Mobility: A new framework to ease the mobility of Indian ICT and young professionals to EU nations like Germany, France, and Italy.
- Tech & Climate: Adoption of a “Comprehensive Strategic Agenda 2030” focusing on maritime security, cybersecurity, and the third phase of the Clean Energy Partnership.
Strategic Timing: The “Trump Effect”
The deal is widely seen as a defensive maneuver against global economic uncertainty. With the Donald Trump administration imposing steep tariffs on both India and the EU (up to 50% in some Indian sectors), this FTA provides a critical alternative trade bloc.
“This agreement represents 25 per cent of the global GDP and one-third of global trade. It is an excellent example of coordination between two major economies.” — PM Narendra Modi
Next Steps: Implementation Timeline
- Legal Scrubbing: The text will undergo 5–6 months of legal vetting and “scrubbing.”
- Ratification: The European Parliament is expected to vote on the deal by late 2026.
- Go-Live: The FTA is projected to come into full force by early 2027.