India and EU Reach Landmark Free Trade Deal

Agreement to remove or reduce tariffs on over 90% of goods traded between the two sides

Jan. 27, 2026 at 9:31pm

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India and the European Union have announced a landmark free trade deal that would remove or reduce tariffs on more than 90% of goods traded between them. The deal, nearly two decades in the making, will see India lower tariffs in two of its most politically sensitive sectors - agriculture and autos. The agreement comes amid a growing wave of bilateral trade deals as countries recalibrate supply chains and commercial ties in response to Washington's use of tariffs.

Why it matters

The India-EU trade pact is seen as a significant development, as it brings together the world's largest single market and one of the fastest-growing major economies. However, the deal still faces an unpredictable hurdle in the form of a potential response from U.S. President Donald Trump, who has taken a protectionist stance and imposed tariffs on both India and the EU in the past.

The details

Under the agreement, India will lower tariffs on European automobile and agricultural products, while the EU will do the same for Indian textiles, leather, marine products and gems and jewelry. India is the EU's 9th largest trading partner, accounting for 2.4% of the bloc's total trade in goods in 2024, far behind major partners like the U.S., China and the U.K. But the EU is one of India's largest trading partners, rivaling the U.S. and China.

  • The India-EU free trade deal was announced on Tuesday, January 28, 2026.
  • The deal has been nearly two decades in the making.

The players

India

One of the fastest-growing major economies in the world.

European Union

The world's largest single market.

Donald Trump

The current U.S. President, who has taken a protectionist stance and imposed tariffs on both India and the EU in the past.

Ursula von der Leyen

The President of the European Commission, who has dubbed the India-EU deal the "mother of all deals".

Hardeep Singh Puri

India's Minister of Petroleum and Natural Gas, who told CNBC that India and the U.S. are at "a very advanced stage" of finalizing a trade deal.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident (San Francisco Chronicle)

“Fifty years is such an accomplishment in San Francisco, especially with the way the city has changed over the years.”

— Gordon Edgar, grocery employee (Instagram)

What’s next

U.S. President Donald Trump has yet to weigh in on the India-EU agreement, and his response could be a persistent cloud over the "historic" deal.

The takeaway

The India-EU trade pact is a significant development, bringing together the world's largest single market and one of the fastest-growing major economies. However, the deal still faces an unpredictable hurdle in the form of a potential response from U.S. President Donald Trump, who has taken a protectionist stance in the past.