After nearly two decades of talks, India and the European Union concluded a free trade agreement on January 27. European cars and wine get cheaper. Indian textiles and jewellery get duty-free access to a market of 45 crore people.
India and the European Union first started negotiating a free trade agreement in 2007. Talks stalled for most of the 2010s, restarted in 2022 and were finally concluded on January 27, 2026. Leaders on both sides called it the “mother of all deals,” which is grand language for a document that is mostly tariff schedules. But the scale justifies some of it. Together the two economies cover about two billion people and roughly a quarter of the world’s GDP.
What India gets
Over 93% of Indian goods will enter the EU duty-free once the deal takes effect, with most of the rest getting reduced tariffs. The biggest winners are labour-heavy export industries such as textiles and garments, leather and footwear, gems and jewellery, and marine products. These are the same sectors hit hardest by the 50% US tariff, which is why the timing matters. Europe is a market of about 45 crore relatively wealthy consumers, and access to it is a partial hedge against American uncertainty.
What Europe gets
India has historically protected its car market with some of the highest tariffs in the world. Under the deal, the duty on EU-made cars falls in stages from 110% to as low as 10%, but only for a limited number of cars each year under a quota. Premium wine tariffs fall from 150% to 20%. European machinery, chemicals and medical devices also get cheaper access.
Every trade deal is a list of what each side is willing to let the other sell more of.
What was left out
India kept dairy and cereals out entirely, protecting millions of small farmers. The EU excluded sugar and several meat products for the same reason. Those exclusions are typical. No country opens the sectors where its most politically sensitive voters work.
The deal is not in force yet. It still has to be formally signed, legally reviewed and approved by the European Parliament, and implementation is expected around early 2027. Until then, nothing changes at the border. What has changed is the direction of travel. In a year when the US was raising walls, India chose to lower some of its own in exchange for access elsewhere.
Sources: Joint statements by the Government of India and the European Commission, January 27, 2026.
- Over 93% of Indian goods will enter the EU duty-free once the deal takes effect.
- India’s tariff on EU cars falls gradually from 110% to as low as 10%, within a quota.
- Premium wine tariffs fall from 150% to 20%. Dairy and cereals are excluded.
- The deal must still be signed and ratified. Implementation is expected around early 2027.
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