India and the European Union have sealed a long-awaited free trade agreement, marking a major step in bilateral economic ties and setting the stage for a sharp expansion in trade between the two economies.
The deal, concluded on Tuesday, January 27, after nearly two decades of negotiations, will lower or eliminate tariffs on most goods traded between India and the EU’s 27 member states. Products covered include textiles, pharmaceuticals, automobiles and wine, affecting markets that together account for close to two billion consumers.
Under the agreement, the European Union will phase in tariff reductions covering nearly 99% of Indian exports by trade value. India, in turn, will cut or remove duties on 96.6% of EU exports. The European Commission said tariffs on EU-made cars entering India will fall from 110% to as low as 10%, while import duties on premium European wines will be reduced from 150% to 20%.
Some politically sensitive sectors have been left out of the pact. India has excluded dairy products, while the EU has kept sugar and meat outside the scope of the agreement.
The agreement is expected to reduce annual tariffs by up to €4 billion ($4.7 billion), deepen supply-chain integration and support job creation in both regions. Bilateral trade totaled $136.5 billion in 2024–2025, and officials on both sides have set a target of $200 billion by 2030.
The pact is expected to take effect later this year, pending legal review and ratification by the European Parliament.
Beyond trade, the two sides also agreed to strengthen cooperation in defense and security and to ease mobility for skilled professionals and students, signaling a broader strategic partnership at a time of rising global trade tensions.
Asia Pacific Newslog 