India and EU Forge 'Mother of All Trade Deals'

Thu Jan 29 2026 19:01:59 GMT+0200 (Eastern European Standard Time)

A landmark trade agreement was announced between India and the European Union after nearly two decades of negotiations, aimed at fostering economic ties amid geopolitical tensions. Leaders celebrated this significant partnership that promises tariff reductions and increased market access.

The European Union and India have finalized a historic trade deal, marking a major milestone in their economic partnership after two decades of negotiations. The agreement focuses on tariff reductions across various goods and services and enhances bilateral cooperation. Leaders highlighted the strategic importance of the deal in the context of rising geopolitical pressures.

The European Union and India have announced a landmark trade deal after nearly two decades of on-off talks, as both sides aim to deepen ties amid tensions with the US.

We did it, we delivered the mother of all deals, European Commission President Ursula von der Leyen said at a media briefing in Delhi. Indian Prime Minister Narendra Modi called the pact historic.

It will allow free trade of goods between the bloc of 27 European states and the world's most populous country, which together make up nearly 25% of global gross domestic product and a market of two billion people.

The deal will see a number of huge tariff cuts across a range of goods and services, and a joint security partnership.

Von der Leyen and European Council President António Costa are in Delhi, where they met Modi at a bilateral summit.

The European Commission said it would eliminate tariffs on most exports of chemicals, machinery and electrical equipment, as well as aircraft and spacecraft, following phased reductions. Significantly, duties on motor vehicles, currently as high as 110%, would be cut to 10% under a quota of 250,000 vehicles. That is six times larger than the 37,000-unit quota India granted to the UK in a deal signed last July.

India will also cut tariffs on wine, beer and olive oil from the EU. Brussels said the agreement would support investment flows, improve access to European markets and deepen supply-chain integration.

Delhi said almost all of its exports would get preferential access into the EU, with textiles, leather, marine products, handicrafts, gems and jewellery set to see a reduction or elimination of tariffs.

While commodities such as tea, coffee, spices and processed foods will benefit from the agreement, Delhi has prudently safeguarded sensitive sectors, including dairy, cereals, poultry, soy meal, certain fruits and vegetables, balancing export growth with domestic priorities, it said.

Delhi and Brussels have also agreed on a mobility framework that eases restrictions for professionals to travel between India and the EU in the short term.

This is India's biggest free trade agreement, Modi said. It will make access to European markets easier for India's farmers and small business. It will also boost manufacturing and services sectors. It will boost innovative partnerships.

The trade deal comes as both India and the EU contend with economic and geopolitical pressure from the US.

Delhi is grappling with 50% tariffs imposed by President Donald Trump last year amid talks aimed at securing a trade deal between India and the US that are still dragging on.

That larger geopolitical context was evident in statements made by leaders.

On Tuesday, von der Leyen said: This is the tale of two giants - the world's second and fourth largest economies. Two giants which chose partnership in a true win-win fashion. A strong message that co-operation is the best answer to global challenges.

The deal with the European Union may help labour-intensive sectors in India such as shrimp farming, textiles, gems and jewellery, which were hit hard by the US tariffs, experts say.

However, the agreement is seen as a building block rather than a final destination as the EU looks to tap into a massive, fast-growing economy.

The formal signing is likely to take place only later this year, after the agreement is approved by the European Parliament and member states. Alongside the trade agreement, India and the European Union are also advancing separate talks on security and defence co-operation, and climate action.