'We will negotiate, finalise FTAs based on what is good for India'

India Seals Historic FTA with European Union

India has wrapped up negotiations on a massive free trade agreement with the European Union, marking a pivotal moment in its trade diplomacy.

The deal, announced on January 27, 2026, at the India-EU summit in New Delhi's Hyderabad House, creates a free trade zone spanning nearly two billion people and accounting for a quarter of global GDP.

Prime Minister Narendra Modi hailed it as the largest FTA in India's history, while EU Commission President Ursula von der Leyen called it the "mother of all deals."

This agreement comes after nearly two decades of on-and-off talks, suspended in 2013 and relaunched in 2022, driven by global trade shifts including U.S. tariff pressures and the need to diversify partnerships.

Attended by top leaders like Modi, von der Leyen, and European Council President António Costa—who were chief guests at India's Republic Day—the summit underscored deepening ties amid geopolitical tensions.

Key Provisions and Mutual Benefits

The FTA promises sweeping tariff reductions to boost bilateral trade, currently valued in the hundreds of billions.

India will progressively cut or eliminate duties on 96.6% of EU exports, targeting high-impact sectors like automobiles (from up to 110% to as low as 10% over time), machinery, chemicals, iron and steel, pharmaceuticals, and even aircraft.

This opens India's market to European giants such as Volkswagen, Mercedes-Benz, and BMW, especially for premium cars priced above €15,000, with initial relief on up to 250,000 units.

In return, the EU grants preferential access to 99% of Indian exports by value, benefiting labor-intensive industries like textiles, apparel, leather, footwear, gems, jewellery, marine products, and electronics.

Beyond goods, the pact covers services, including financial and maritime sectors, digital trade, MSME support, professional mobility, and supply-chain resilience.

Modi emphasized, highlighting gains for India's export-oriented economy.

This agreement will facilitate access to the European market for our farmers and small industries, create opportunities in manufacturing, and strengthen cooperation in our services sectors,

India's Firm Stance on National Priorities

Commerce Minister Piyush Goyal has reiterated that India will negotiate and finalize FTAs strictly based on what serves the country's best interests.

This approach shines through in the EU deal, where sensitive areas like agriculture and dairy remain protected, avoiding concessions that could harm local farmers.

Goyal's update on ongoing talks, including with the U.S., stresses that every partner must align with India's goals—no deal at any cost.

The strategy reflects India's diversified foreign policy, reducing reliance on any single bloc amid U.S. tariffs on Indian goods and China's trade practices.

Experts note this FTA replaces lost EU preferential benefits in textiles, positioning India to capture orders from competitors like Bangladesh and Vietnam.

While European autos gain entry, Indian manufacturers may face competition, spurring innovation and partnerships.

Overall, the pact sets a template for future agreements, balancing market access with safeguards.

This landmark EU-India FTA, concluded after 18 years, slashes tariffs on most goods, boosts key Indian exports, and protects sensitive sectors, all while exemplifying India's resolute focus on deals that truly benefit its economy.