India and the European Union (EU) may be nearing the finish line on a long-pending free trade agreement (FTA), with an announcement expected at the India-EU Summit in New Delhi on Tuesday, Jan. 27.
European Council President Antonio Luis Santos da Costa and European Commission President Ursula von der Leyen will be the chief guests at the Republic Day celebrations on Jan. 26. Alongside the ceremonial events, both leaders are expected to focus on pushing forward free trade talks with India.
Once signed, the agreement will need ratification by the European Parliament, a process that could take at least a year.
According to Reuters, the deal could boost bilateral trade and provide relief to Indian exporters, particularly in sectors such as textiles and jewellery, which have been hit by 50% US tariffs since August 2025.
As India and the EU move closer to finalising what Brussels has described as the “mother of all trade deals,” even Norway has expressed strong support for deeper economic ties with New Delhi, even though it remains outside the India-EU FTA framework.
India-EU Deal: What’s The Focus?
The focus of the India-EU trade deal is to create a fair and balanced partnership that benefits both sides. Ursula von der Leyen recently called it a “historic trade agreement” at the World Economic Forum in Davos, saying, “We are choosing fair trade over tariffs. Partnership over isolation. Sustainability over exploitation.”
The deal aims to reduce tariffs on European goods like cars and wine while opening wider markets in India for electronics, textiles and chemicals, according to Reuters. It also reflects efforts by both sides to hedge against uncertainties in US trade policies.
Lower car import taxes would help European automakers such as Volkswagen and Renault expand in India, where high tariffs have so far made imported models expensive despite the country being the world’s third-largest car market.
India-EU Deal: Why It Matters For India
The proposed India-EU free trade agreement is important for India as it would be the country’s ninth trade deal in four years. It shows New Delhi’s effort to secure overseas markets at a time when global trade is becoming more restrictive.
According to Reuters, the deal would help Indian companies gain better access to the EU, which is looking to diversify supply chains and reduce its dependence on China, while also tapping into India’s $4.2 trillion economy.
The EU is already one of India’s biggest trading partners, along with the US and China. Trade in goods and services between India and the 27-nation bloc crossed $190 billion in 2024-25. In the same period, India reportedly exported about $76 billion worth of goods and $30 billion in services to the EU.
Though average EU tariffs on Indian goods are low at around 3.8%, sectors such as textiles and garments face higher duties of about 10%, according to the Global Trade Research Initiative, reported Reuters. These labour-intensive sectors are likely to benefit the most from lower tariffs under the agreement.
The deal could also help Indian exporters recover after the EU started withdrawing tariff benefits under the Generalised System of Preferences in 2023. Products such as garments, pharmaceuticals and machinery were affected. An FTA could ease this pressure.
Apart from goods, India is seeking easier movement for its professionals and more opportunities for IT and services exports. This makes the agreement important not only for trade, but also for jobs and growth in the services sector.
India-EU Deal: How Long Has It Been In The Works?
Talks on an India-EU free trade agreement began in 2007, when both sides first proposed the deal under the name Broad-Based Trade and Investment Agreement (BTIA).
Many rounds of negotiations took place between 2007 and 2013, but discussions stalled due to differences over issues such as market access, tariffs, intellectual property rights and labour and environmental standards.
After a pause, negotiations were revived in 2022. The talks gained urgency as global trade conditions changed, with the US adopting more protectionist policies under US President Donald Trump’s second term. This pushed many countries, including India and the EU, to look for alternative markets and stronger trade partnerships.
Momentum increased further after European Commission President Ursula von der Leyen’s visit to India in February 2025. As per reports, commerce secretary Rajesh Agarwal said last week that India and the EU have made strong progress, with 20 of the 24 chapters already agreed upon.
India-EU Deal: Significance Amid US Tariff Pressure
For India, which has been hit hard by steep US tariffs, the EU trade deal could provide a much-needed boost.
Since the US imposed 50% tariffs on Indian goods in August 2025, India has been seeking alternative markets and signing trade agreements with other countries. India hopes that the European Commission president’s visit to New Delhi from Jan. 25 to 27 will result in a trade deal announcement. Such an agreement would help India increase exports and offset the recent drop in shipments to the US.
According to experts cited by CNBC, the deal gives India an alternative foothold in the West and restores some bargaining power to negotiate with the US.
Also Read: EU, India To Strengthen Ties With New Security And Defence Partnership
