India and the European Union (EU) on Tuesday (January 27, 2026) introduced the conclusion of negotiations on a free commerce settlement (FTA). Underneath the settlement, the EU will scale back tariffs on 99.5% of products exported by India into the area, and most tariffs will probably be lowered to 0% as quickly because the settlement comes into power.
In the meantime, India has granted tariff concessions on 97.5% of the commerce between the 2 nations.
Commerce Minister Piyush Goyal and European Commissioner for Commerce and Financial Safety Maroš Šefčović on Tuesday signed a joint announcement on the conclusion of the FTA negotiations within the presence of Prime Minister Narendra Modi, European Fee President Ursula von der Leyen and European Council President Antonio Costa.
The conclusion of the FTA negotiations marks the tip of a 20-year course of since negotiations first started in 2007. After a number of stops and breaks, negotiations resumed in 2022 with either side agreeing to exclude the problems on which no settlement could possibly be reached.
Ministry of Commerce and Business officers mentioned the wording within the doc would first be sorted out over the following 10 to fifteen days, adopted by “authorized scrutiny.” Solely then will it’s translated and despatched to all 27 EU member states earlier than ratification by the European Parliament.
“The mom of all trades”
“At this time, India signed the most important free commerce settlement in its historical past,” Modi mentioned in an announcement. “This historic settlement will improve entry to European markets for our farmers and small-scale industries, create new alternatives in manufacturing and strengthen cooperation within the providers sector.”
Ms von der Leyen additionally praised the historic nature of the settlement.
“We’ve handed over the mom of all offers,” she mentioned in an announcement. “We’re making a market of two billion folks. This can be a story of two giants, the world’s second and fourth largest economies. Two giants selecting to accomplice in a very win-win manner. A powerful message that cooperation is one of the best reply to international challenges.”
Nonetheless, each made certain to exclude their respective key sectors. India, for instance, has ensured that not solely dairy but additionally strategic agricultural sectors have been excluded. The EU will keep present tariffs on delicate merchandise equivalent to beef, sugar, rice, poultry, milk powder, honey, bananas, comfortable wheat, garlic and ethanol.
What India Will get
In line with the Ministry of Commerce and Business, India has achieved tariff reductions on 97% of tariff objects, masking 99.5% of its commerce worth. Of those, 90.7% of India’s exports can have tariffs fully eradicated on the primary day of implementation of the settlement. This contains labor-intensive sectors equivalent to textiles, leather-based, footwear, tea, espresso, spices, sporting items, toys, gems and jewellery, and sure seafood merchandise.
Tariffs will probably be eliminated on an additional 2.9% of India’s exports over three to 5 years, together with sure seafood merchandise, processed meals and arms and ammunition. As well as, tariffs will probably be lowered on 6% of Indian exports, together with sure poultry merchandise, preserved greens and bakery merchandise.
“Main labor-intensive sectors (textiles, attire, marine, leather-based, footwear, chemical substances, plastics/rubber, sporting items, toys, gems and jewelry, and so forth.) account for greater than 2.87 billion rupees ($33 billion) of exports and are presently topic to import duties of between 4% and 26% within the EU, that are important for job creation, however will probably be lowered to zero with the entry into power of the FTA, enhancing competitiveness.” within the EU market,” the ministry mentioned in a launch.
Notably, among the many sectors that India primarily exports to the EU are marine merchandise (present tariffs as much as 26%), chemical substances (presently 12.8%), plastic and rubber merchandise (6.5%), leather-based footwear (17%), textiles and attire (12% every), base metals (10%), gems and jewelery (4%), furnishings and associated client items (10.5%), toys and sporting items (4.7%).
Relating to providers, the EU has agreed initiatives throughout 144 service subsectors, together with IT/ITeS, skilled providers, schooling and different enterprise providers.
India’s concessions
General, India has proposed tariff elimination and discount on 92.1% of tariff objects, which account for 97.5% of EU exports to India. Of those, 49.6% of tariff objects are scheduled to have tariffs eradicated instantly after the settlement takes impact.
An additional 39.5% of tariff objects will probably be topic to phased tariff elimination over 5, seven and 10 years. Moreover, tariffs will probably be lowered in levels for 3% of merchandise.
“Imports of EU high-tech merchandise are anticipated to diversify India’s import sources, thereby lowering enter prices for corporations, benefiting customers and creating alternatives for Indian corporations to combine into international provide chains,” the assertion added.
Particularly for the EU, the next European sectors can have duty-free entry to the Indian market: mechanical and electrical tools, plane and spacecraft, optical tools, medical and surgical tools, plastics, valuable stones and metals, chemical substances, vehicles, metal, prescribed drugs, and varied agricultural merchandise.
By way of providers, India has agreed to open up 102 sub-sectors masking EU priorities equivalent to skilled, enterprise, telecommunications, maritime, monetary and environmental providers.
Addressing drawback areas
Negotiations over a number of areas, equivalent to vehicles and wine, led to some issues, however in the end it was discovered that either side agreed to a quota-based system to their satisfaction.
India has agreed to permit European vehicles valued above Rs 25 million to be imported at a decrease tariff of 10% from the present 110%, however topic to quotas. Priced at over Rs 25 million, these vehicles are divided into three buckets primarily based on value stage.
Firms within the lowest bucket, the place Indian producers are current, can have the bottom allocation to European corporations. The upper the value stage, the upper the quantity allotted to European producers.
Relating to wine, India additionally agreed to cut back tariffs from the present 150% to 20-30% relying on the value of wine, making it topic to quotas.
