Archive · 28 Jan 2026
India and EU Finalize Historic Free Trade Agreement
India and the European Union (EU) have finished negotiating a big trade deal called the Free Trade Agreement (FTA).
This deal is very important because it includes a huge market of 2 billion people and represents a quarter of the world's economy.
The deal will make it easier to trade things like clothes, medicine, steel, and machines between India and the EU.
It will also help Indian companies deal with higher taxes from the United States.
The US Treasury Secretary criticized Europe for buying oil from India that was originally from Russia, saying it helps fund the war in Ukraine.
The deal is expected to be signed later this year and will start working early next year.
Additionally, India and the EU are also working on a Security and Defence Partnership to enhance cooperation in areas like maritime security, cyber defence, and counter-terrorism.
India and the EU have finalized a Free Trade Agreement (FTA) after nearly two decades of negotiations, representing a market of 2 billion people and 25% of global GDP.
The FTA aims to boost trade, economic integration, and strengthen economic ties between India and the EU, with implementation expected in early 2027.
The agreement includes provisions for reducing tariffs on European cars and maintaining high tariffs on certain agricultural and dairy products to protect Indian farmers.
India and the EU are also set to sign a Security and Defence Partnership (SDP) to enhance cooperation in areas like maritime security, cyber defence, and counter-terrorism.
US Treasury Secretary criticized Europe for purchasing Russian oil refined in India, accusing them of financing the war in Ukraine.
- Who
- India and the European Union (EU)
- What
- Finalized a Free Trade Agreement (FTA) and a Security and Defence Partnership (SDP)
- When
- January 27, 2026, with implementation expected in early 2027
- Where
- India and the EU
- Why
- To boost trade, economic integration, strengthen economic ties, and enhance security cooperation
India
EU
Tariffs on Automobiles
India
India sought to reduce EU import duties on Indian steel and maintain high tariffs on European cars to protect domestic industries.
EU
The EU pushed for India to reduce import duties on European cars, which are currently over 100%, to around 40%.
Agricultural and Dairy Products
India
India kept some agricultural and dairy products out of the agreement to protect its farmers.
EU
The EU agreed to exclude sensitive agricultural and dairy products from the deal to ensure broad agreement and real benefits.
- Agreement Name
- India-EU Free Trade Agreement (FTA)
- Announcement Date
- January 27, 2026
- Expected Implementation
- Early 2027
- Market Size
- 2 billion people, 25% of global GDP
- Key Sectors
- Manufacturing, services, textiles, chemicals, gems, jewellery, electrical machinery, leather, footwear
- US Tariffs on India
- 50% on goods, including for buying Russian oil
- US Criticism
- Europe financing Russia's war by buying refined oil products from India
- EU's Largest Trading Partner
- India
- Bilateral Trade in Goods (FY25)
- $136.53 billion
- Indian Exports to EU (FY25)
- $75.85 billion
- Indian Imports from EU (FY25)
- $60.68 billion
Sources
‘Financing war against itself’: US slams Europe over Russian oil as India-EU trade deal nears
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