India, EU Conclude Long-Pending Free Trade Agreement Talks, Implementation Likely By 2027

Last Updated:January 27, 2026, 08:18 IST

Commerce Secretary Rajesh Agrawal confirmed on Monday that the deal has been finalised and will be formally announced during the summit scheduled for January 27

EU chief Ursula Von der Leyen with PM Modi at Republic Day parade event | Image: X

After nearly two decades of negotiations, India and the European Union (EU) have formally concluded talks on a comprehensive Free Trade Agreement (FTA), officials announced ahead of the 16th India-EU Summit in New Delhi. Negotiations that began in 2007 and stalled multiple times in the past have now reached a successful conclusion, marking one of the most significant milestones in India’s global trade strategy.

Commerce Secretary Rajesh Agrawal confirmed on Monday that the deal has been finalised and will be formally announced during the summit scheduled for January 27 (Tuesday). The agreement has been described by officials on both sides as “balanced and forward-looking".

While formal negotiations have concluded, several procedural steps remain before the FTA can take effect. These include legal scrutiny (“legal scrubbing") of the text, which is currently underway and expected to last several months. The pact is anticipated to be signed later in 2026 after legal vetting is complete. The ratification procedures will follow, including approval by the European Parliament, and officials say the process is likely to be completed in time for the agreement to come into force in early 2027.

India and the EU will not require approval from each individual EU member state, as the FTA is structured under EU exclusive competences, avoiding a more time-intensive ratification by all 27 national parliaments.

What Does The Deal Include?

According to officials familiar with the text, the agreement is expected to substantially reduce tariffs on a wide range of goods. India is likely to offer zero-duty access to key Indian exports such as textiles, leather and marine products, while providing calibrated tariff concessions on European sectors like automobiles, wine and spirits, CNBC-TV18 reported.

Sensitive sectors, including agriculture and dairy, have been managed carefully in recognition of domestic sensitivities on both sides, with selective exclusions or phased approaches in parts of the deal.

European officials have highlighted efforts to reduce tariffs on vehicles and create complementary opportunities between India’s small-car industry and Europe’s larger, technologically advanced automobile sector.

Both parties emphasise provisions to strengthen investment flows, supply-chain integration and job creation through enhanced market access and reduced barrier regimes.

Strategic and Economic Significance

India and the EU together account for a significant share of global economic output. The EU remains one of India’s largest trading partners, with two-way trade reaching approximately $136 billion in the year ending March 2025—a figure that is expected to grow substantially under the FTA framework.

According to officials, several anticipated benefits include:

• Expansion of exports in labour-intensive sectors such as textiles and leather goods.

• Greater foreign investment flows into India and improved access for European firms to India’s rapidly growing consumer market.

• Enhanced integration of supply chains, particularly in sectors such as automotive and manufactured goods.

Diplomatic Context

The conclusion of the FTA comes at a time when both India and the EU are seeking to diversify their economic partnerships amid shifting global trade dynamics and rising protectionist pressures. EU leaders have described the agreement as a strategic step to expand ties beyond traditional partners, while Indian officials frame it as a key part of New Delhi’s broader external trade strategy.

European Commission President Ursula von der Leyen and European Council President António Costa, who are in New Delhi and presided as chief guests at the Republic Day 2026 parade, are expected to join Prime Minister Narendra Modi in formally unveiling the completed negotiations during the summit.

Outlook and Implementation

Though the announcement marks a historic breakthrough, implementation of the agreement, including signature, ratification, and entry into force, will unfold over the coming year. Industry groups and export bodies on both sides are preparing for significant adjustments as new opportunities and competitive pressures emerge under the framework of the India-EU FTA.

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