The EU–India Trade Agreement: Shaping the World’s Largest Free Trade Zone
30 January 2026, Brussels: The European Union and India concluded negotiations earlier this week for a historic, ambitious and commercially significant Free Trade Agreement (FTA), the largest such deal ever concluded by either side. The agreement is set to strengthen economic and political ties between the world’s second- and fourth-largest economies at a time of rising geopolitical tensions and global economic challenges, underscoring a shared commitment to economic openness and rules-based trade.
European Commission President Ursula von der Leyen described the agreement as a landmark achievement, stating that the EU and India have deepened the partnership between the world’s largest democracies. She noted that the FTA creates a free trade zone covering nearly two billion people, with significant economic gains expected on both sides. According to her, the agreement sends a strong global signal that rules-based cooperation continues to deliver meaningful outcomes and represents only the beginning of a stronger and more comprehensive EU–India relationship.
The EU and India currently trade goods and services worth over €180 billion annually, supporting close to 800,000 jobs across the EU. Under the agreement, EU goods exports to India are expected to double by 2032, driven by the elimination or reduction of tariffs covering 96.6 per cent of EU goods exports. Overall, the tariff cuts are projected to save European exporters around €4 billion per year in duties.
The deal represents the most ambitious trade opening India has ever granted to a partner country. It is expected to provide a significant competitive advantage to key EU industrial and agri-food sectors by offering enhanced access to India’s market of 1.45 billion people, the world’s most populous nation and the fastest-growing large economy, with an annual GDP of approximately €3.4 trillion.
Expanded opportunities for European businesses
India has agreed to tariff reductions for the EU that go beyond concessions offered to any of its other trading partners. Tariffs on cars, currently as high as 110 per cent, will be reduced progressively to as low as 10 per cent, while duties on car parts will be fully eliminated over a period of five to ten years. Tariffs of up to 44 per cent on machinery, 22 per cent on chemicals and 11 per cent on pharmaceuticals will also be largely phased out.
A dedicated chapter in the agreement is aimed at helping small and medium-sized enterprises (SMEs) benefit from new export opportunities. Both sides will establish contact points to provide SMEs with information on the FTA and assist them in addressing implementation-related issues. SMEs are also expected to gain from tariff reductions, reduced regulatory barriers, and greater transparency, stability and predictability under the agreement.
Major reduction in agri-food tariffs
The agreement removes or significantly reduces often prohibitive tariffs—averaging over 36 per cent—on EU agri-food exports, opening up a substantial market for European farmers. Indian tariffs on wines will be cut from 150 per cent to 75 per cent upon entry into force and will eventually fall to as low as 20 per cent. Tariffs on olive oil will be reduced from 45 per cent to zero over five years, while duties of up to 50 per cent on processed agricultural products such as bread and confectionery will be eliminated.
Sensitive agricultural sectors in the EU will remain fully protected. Products such as beef, chicken meat, rice and sugar are excluded from liberalisation, and all Indian agricultural imports will continue to comply with the EU’s strict health and food safety standards.
In parallel, negotiations are ongoing for a separate EU–India Geographical Indications (GI) agreement. Once concluded, this is expected to support iconic EU agricultural products by preventing unfair competition from imitations in the Indian market.
Services access, IP protection and sustainability commitments
The FTA grants EU companies enhanced access to India’s services market, including key sectors such as financial services and maritime transport. It contains India’s most ambitious commitments on financial services to date, exceeding those made in any of its previous trade agreements.
The agreement also provides strong protection and enforcement of intellectual property rights, covering copyright, trademarks, designs, trade secrets and plant variety rights. By aligning Indian and EU IP frameworks more closely and building on existing international treaties, the agreement aims to facilitate trade and investment for IP-dependent businesses on both sides.
Sustainability is addressed through a dedicated trade and sustainable development chapter, which includes commitments on environmental protection, climate change mitigation, workers’ rights and women’s empowerment. The agreement also establishes a framework for dialogue and cooperation on trade-related environmental and climate issues.
Additionally, the EU and India are expected to sign a Memorandum of Understanding to create an EU–India platform for cooperation on climate action, scheduled for launch in the first half of 2026. Subject to EU budgetary procedures, up to €500 million in EU support is envisaged over the next two years to assist India in reducing greenhouse gas emissions and advancing sustainable industrial transformation.
Next steps
On the EU side, the negotiated draft texts are expected to be published shortly, followed by legal revision and translation into all official EU languages. The European Commission will then submit proposals to the Council for the signing and conclusion of the agreement. After signature, the agreement will require the consent of the European Parliament and final approval by the Council. Once ratified by India, the FTA can formally enter into force.
Background
EU–India FTA negotiations were first launched in 2007, suspended in 2013, and relaunched in 2022. The 14th and final formal negotiating round took place in October 2025, followed by technical and political-level discussions.
Alongside the FTA, negotiations on a Geographical Indications Agreement and an Investment Protection Agreement are continuing.
Also Read: Padma Awards 2026: Eight Agricultural Stalwarts Honoured as Icons of Indian Farming
Global Agriculture is an independent international media platform covering agri-business, policy, technology, and sustainability. For editorial collaborations, thought leadership, and strategic communications, write to pr@global-agriculture.com
