India and European Union Conclude Landmark Free Trade Agreement

India and the European Union have concluded a long-pending Free Trade Agreement (FTA), marking one of the most significant economic partnerships India has entered into in recent decades. Announced on January 27, 2026, during the India–EU Summit in New Delhi, the agreement brings to a close nearly twenty years of negotiations and signals a renewed commitment to deeper economic and strategic cooperation between the two sides.

The pact comes at a time when global trade is facing fragmentation due to rising protectionism, supply-chain disruptions, and geopolitical tensions. Against this backdrop, the India–EU FTA stands out as a strong endorsement of open, rules-based trade between two of the world’s largest and most influential economic entities.

The India-EU free trade agreement will reshape supermarket shelves, job prospects and India’s wider role in global trade. (Photo: AP) | India Today

Scale and Scope of the Agreement

Described by Indian officials as the “mother of all trade deals,” the agreement covers a vast range of sectors, including goods, services, investment, intellectual property, and customs facilitation. Together, India and the EU account for nearly a quarter of global GDP and a significant share of international trade, making this FTA one of the most consequential bilateral trade arrangements globally.

A central feature of the agreement is the unprecedented level of market access it provides. India is set to receive preferential or duty-free access for over 99 percent of its exports by value to the EU market. In return, the European Union will gain liberalised access for around 97 percent of its export lines into India, reflecting a carefully negotiated balance between domestic sensitivities and global competitiveness.

Boost for Indian Exports and Manufacturing

For India, the FTA is expected to deliver a major boost to exports, particularly in labour-intensive and manufacturing sectors. Industries such as textiles, garments, leather, gems and jewellery, chemicals, pharmaceuticals, engineering goods, and marine products are likely to see substantial gains due to reduced tariffs and smoother access to European markets.

The agreement also aligns closely with India’s broader economic objectives, including the “Make in India” and export-led growth strategies. By integrating Indian producers more deeply into European value chains, the FTA is expected to encourage higher standards, improved technology adoption, and greater global competitiveness among Indian firms.

Opportunities for European Businesses

European companies are set to benefit from improved access to one of the world’s fastest-growing large economies. The phased reduction of tariffs on high-value items such as automobiles, machinery, medical devices, and chemicals is expected to create new opportunities for European manufacturers and exporters.

In addition to goods, the agreement opens doors for European service providers in areas such as finance, logistics, maritime services, and professional services. Clearer regulatory frameworks and stronger investment protections are expected to enhance investor confidence and promote long-term economic engagement in India.

Services, Mobility, and Investment Cooperation

Beyond trade in goods, the FTA places strong emphasis on services, investment, and mobility. Provisions facilitating the movement of skilled professionals, business visitors, and intra-company transferees are expected to benefit Indian IT professionals, engineers, and service providers seeking opportunities in Europe.

At the same time, the agreement strengthens intellectual property protections, simplifies customs procedures, and improves dispute-resolution mechanisms. These measures are aimed at reducing transaction costs, increasing transparency, and ensuring smoother cross-border trade and investment flows.

Strategic and Geopolitical Importance

The conclusion of the India–EU FTA carries significance far beyond economics. It reinforces a strategic partnership based on shared democratic values, economic resilience, and a commitment to multilateralism. As global supply chains are being reconfigured, the agreement positions India and the EU as reliable partners seeking stability, diversification, and long-term cooperation.

For India, the deal also helps reduce dependence on a limited number of export destinations and mitigates risks arising from trade tensions elsewhere. For the EU, deeper engagement with India strengthens its presence in the Indo-Pacific and supports its broader geopolitical and economic strategy.

The MGMM Outlook

The India–European Union Free Trade Agreement marks a historic advancement in bilateral economic relations, concluding nearly two decades of negotiations. Covering goods, services, investment, intellectual property, and customs facilitation, the deal grants India preferential or duty-free access for over 99 percent of its exports to the EU while offering the EU liberalised access to roughly 97 percent of its export lines into India. This agreement comes at a time of global trade fragmentation, signaling a commitment to open, rules-based commerce and reinforcing India’s efforts to integrate domestic industries into global value chains. Sectors such as textiles, leather, gems and jewellery, chemicals, pharmaceuticals, and engineering goods are poised to benefit significantly from reduced tariffs and smoother access to European markets, aligning with India’s “Make in India” and export-driven growth strategies.

For European businesses, the FTA offers expanded opportunities in a rapidly growing Indian market, including goods like automobiles, machinery, and medical devices, alongside services in finance, logistics, and professional sectors. Provisions facilitating the mobility of skilled professionals, strengthened intellectual property protections, and simplified customs processes further enhance trade and investment flows. Beyond economic gains, the agreement carries strategic weight, strengthening ties between two democratic entities committed to multilateralism, economic resilience, and diversified global engagement. By fostering deeper cooperation across trade, services, and investment, the FTA positions India and the EU as mutually reliable partners in an evolving global economy.

(Sources: Financial Times, India Today, Times of India)