India and the European Union (EU) have officially finalised a landmark Free Trade Agreement (FTA) after nearly 20 years of negotiations. The announcement was made on January 27, 2026, during the India–EU Summit held in New Delhi.

Prime Minister Narendra Modi described the deal as historic, saying it will strengthen economic ties between India and the EU and open new opportunities for trade, investment, and cooperation.

What Is the India–EU Free Trade Agreement?

A Free Trade Agreement (FTA) is a deal between two regions to reduce or remove trade barriers such as import duties, tariffs, and restrictions.
The India–EU FTA aims to make trade easier and more affordable between India and the 27 member countries of the European Union.

Negotiations for this agreement started in 2007, were paused for several years, and were later resumed. After multiple rounds of discussions, both sides have now reached a final understanding.

Why Is This Deal Important?

The India–EU Free Trade Agreement is important because of the size and influence of both partners:

• India and the EU together represent around 2 billion people
• They account for nearly 25% of the global economy
• The EU is already India’s largest trading partner

With this agreement, trade between the two regions is expected to grow faster and become more balanced.

Key Highlights of the India–EU FTA

Reduction in Import Duties

The agreement will reduce or remove import duties on a large number of goods traded between India and the EU. This will help businesses export products at lower costs.

Impact on the Automobile Sector

India has agreed to gradually reduce import duties on European cars. Currently, these duties are very high. The reduction will happen in phases over several years.

Boost for Indian Exports

Indian sectors like textiles, garments, footwear, gems, and jewellery are expected to benefit as exports to Europe become more competitive.

Services and Skilled Professionals

The deal also includes discussions on services trade and professional mobility, which could help Indian service providers and skilled professionals access European markets more easily.

Protection for Sensitive Sectors

Some sensitive sectors, such as agriculture and dair,y will remain protected to safeguard domestic interests.

What Happens Next?

Although the agreement has been finalised, it still needs to go through:

1. Legal review
2. Formal signing
3. Approval by the Indian Parliament and European Parliament

Once approved, the agreement is expected to come into force in a phased manner, possibly starting later in 2026.

Global and Strategic Significance

The India–EU FTA comes at a time when global trade is changing rapidly. Many countries are looking to diversify trade partnerships due to rising trade tensions worldwide.

For India, this deal strengthens its position as a global economic player.
For the EU, it provides better access to one of the fastest-growing economies in the world.

Conclusion

The India–EU Free Trade Agreement marks a major milestone in international trade relations. After two decades of talks, both sides have taken a significant step toward deeper economic cooperation.

As the agreement moves toward implementation, it is expected to create long-term benefits for trade, businesses, professionals, and the overall economy of both India and Europe.