Archive · 27 Jan 2026
India-EU FTA to Boost Trade and Economic Ties
India and the European Union have finished talking about a big trade deal.
This deal will make it cheaper to buy things like cars, clothes, shoes, and wine from Europe.
Right now, these items cost a lot because of high taxes.
The new deal will lower these taxes from 110% to 40% at first, and then to 10% later.
This means cars like those from Mercedes-Benz, BMW, and Volkswagen, as well as clothes and wines, could become much cheaper.
The deal is expected to be finalized by mid-2028, but the value of the Indian rupee might still keep prices high.
The deal is also expected to help Indian companies sell more things to Europe.
The EU and India will also work together more on things like security and defence.
This deal is part of a bigger plan to make trade easier between India and Europe.
The deal is called the 'mother of all deals' because it is very big and important.
India and the EU have concluded negotiations for a Free Trade Agreement (FTA) to boost trade and economic ties.
The FTA will reduce import duties on high-end European cars, textiles, footwear, and wines, with initial tariffs dropping from 110% to 40% and eventually to 10%.
The deal is expected to be signed this year and come into effect by mid-2028, with a cap of 200,000 combustion-engine cars annually.
The FTA will also liberalise norms in several services sectors, including telecommunications, transportation, accounting, and auditing.
The EU will provide duty-free access to a number of Indian goods from labour-intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather, and footwear.
- Who
- Indian government and European Union
- What
- Reduction in import duties on high-end European cars, textiles, footwear, wines, and liberalisation of norms in several services sectors
- When
- Expected to be announced on January 27, effective mid-2028
- Where
- India
- Why
- To boost trade, create a free market, and make European cars, textiles, and wines more accessible
- Expected Announcement Date
- January 27
- Initial Tariff Reduction
- 40% on cars priced above 15,000 euros
- Current Tariff
- 110% on high-end cars
- Future Tariff
- 10% over time
- Expected FTA Effectiveness
- Mid-2028
- Rupee Depreciation
- 19% against the euro in 2025
- Import Cap
- 200,000 combustion-engine cars annually
- CKD Duty Under FTA
- 40%
- India-EU Bilateral Trade in Goods (2024-25)
- USD 136.53 billion
- India's Trade Surplus (2024-25)
- USD 15.17 billion
- EU Tariffs on Indian Goods
- 3.8% average, 10% for labour-intensive sectors
- India's Weighted Average Duty on EU Goods
- 9.3%
- India's Major Goods Exports to EU (FY2025)
- Petroleum products, electronics, textiles, machinery, organic chemicals, iron and steel, gems and jewellery, pharma, auto parts, footwear, coffee
- India's Main Imports from EU (FY2025)
- Machinery, electronics, aircraft, medical devices, gems and jewellery, organic chemicals, plastics
- India's Key Services Exports to EU
- Other business services, telecommunication and IT, transportation services
- India's Services Imports from EU
- Intellectual property services, telecommunication and IT
Sources
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