EU, India sign free trade deal to slash €4bn in export duties

27th Jan 2026 09:29

(Sharecast News) - The European Union and India on Tuesday finally signed a free trade agreement expected to slash €4bn of duties on the bloc's exports, described as the "mother of all deals" by European Commission president, Ursula von der Leyen.

After almost 20 years of talks, officials shook hands on a deal giving the 27-nation bloc access to India's tightly regulated market. Discussions had sped up in the last six months in response to US President Donald Trump's global tariff war.

The agreement is expected to double EU exports to India by 2032 by eliminating or reducing tariffs on 96.6% of traded goods by value, saving European companies €4bn (£3.5bn) in duties, the EU said in a statement. The bloc and India already trade more than €180bn worth of goods and services per year, officials said.

"Europe and India are making history today," von der Leyen said in a statement after landing in Delhi, where she met the Indian prime minister, Narendra Modi, on Tuesday. "We have concluded the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit."

Sensitive European agricultural sectors will be fully protected, as products such as beef, chicken meat, rice and sugar were excluded from liberalisation in the agreement.

Modi said the deal represented about a third of global trade and called it the "biggest free trade deal in history".

The deal will lead to Delhi slashing tariffs on cars to 10% over five years from as high as 110%, the EU said. Under the agreement, up to 250,000 European-made vehicles will ultimately be about to enter India at preferential duty rate reduced to 10% from 110%.

Tariffs of up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will be largely eliminated. Steel and iron levies of up to 22% will also be phased out over a 10-year period.

Duties on EU wine will be initially halved from the current 150% cent and eventually around 20%, while those on olive oil will be slashed to zero over five years from 45%. Tariffs on processed agricultural products, such as bread and confectionery, of up to 50% will also be eliminated.

Trade talks between began in 2007 but were suspended in 2013 after rows over access to cars, agriculture and dairy. However, they restarted in 2022 and picked up pace as Trump slapped a 50% tariff on Indian exports to the US.

Last week, Trump threatened EU countries with additional tariffs of 10% if they opposed his ambitions to annexe Greenland.

Officials indicated a formal signing of the deal could take place later this year and come into force by early next year. The deal will go to the European parliament and EU member states, as well as India's cabinet, to gain approval.

Reporting by Frank Prenesti for Sharecast.com