The European Union and India signed a landmark free trade agreement on January 27, 2026, during the 16th EU-India Summit in New Delhi's Hyderabad House. European Commission President Ursula von der Leyen, European Council President António Costa, and Indian Prime Minister Narendra Modi finalized the deal after nearly two decades of negotiations.

The agreement aims to eliminate or reduce tariffs on over 96% of EU goods exports to India by value, potentially doubling EU exports by 2032 and saving European firms around €4 billion annually in duties. India gains preferential access to 97% of EU tariff lines, covering 99.5% of trade value, with immediate duty-free entry for textiles, leather, marine products, chemicals, rubber, base metals, gems, and jewelry.

Specific cuts include Indian tariffs on EU cars dropping from up to 110% to 10% over five years, with immediate reductions to 30-35% on 250,000 higher-priced vehicles annually. Tariffs on EU wines fall from 150% to 75% initially and then to 20%, while spirits duties decrease to 40%. Most tariffs on machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%) will be eliminated. Sensitive agricultural items like dairy, rice, sugar, and beef remain protected.

Talks, first launched in 2007 and relaunched in 2022, accelerated amid U.S. President Donald Trump's protectionist policies. Trump imposed 50% tariffs on Indian goods, 25% reciprocal plus 25% punitive for Russian oil imports, in August 2025, prompting both sides to diversify trade ties. Von der Leyen called it history-making, while Modi dubbed it the "mother of all deals," opening opportunities for 1.4 billion Indians and Europeans.

The EU-India pact also covers services market access, investment facilitation, customs procedures, and regulatory cooperation on sustainability. Separate agreements on investment protection and geographical indications were advanced alongside a security and defense partnership.

As of April 13, the deal undergoes legal vetting, translation into EU languages, and ratification. It requires EU Council qualified majority approval, European Parliament consent, and Indian domestic processes, with entry into force projected for early 2027. EU-India goods trade reached €120 billion in 2024, with the EU as India's top partner.

Trump later responded in February by cutting U.S. tariffs on India to 18% after New Delhi halted Russian oil purchases and pledged major U.S. energy and tech buys, easing bilateral tensions.

The agreement strengthens ties between the world's largest democracies, covering nearly 2 billion people and positioning them against global trade fragmentation.