India and the European Union have reached a historic free trade agreement, concluding nearly 20 years of on-and-off negotiations and creating one of the world’s largest trading blocs, encompassing close to two billion people.
European Commission president Ursula von der Leyen described the accord as the “mother of all deals” after talks concluded late on Monday, following a rapid acceleration in negotiations over the past six months.
The agreement is set to open India’s vast and traditionally protected market to the EU’s 27 member states, significantly boosting trade in manufacturing and services.
Today, the world’s two largest democracies launched a Security and Defence Partnership.
A platform for stranger cooperation on the strategic issues that matter most
– from defence industry to maritime security.
This is what trusted partners do. https://t.co/b4aLfWohLW
— Ursula von der Leyen (@vonderleyen) January 27, 2026
The development comes as the United States and China, the two largest economies, step up their efforts to secure and expand their economic interests. President Donald Trump has imposed sweeping tariffs bilaterally on nearly all major trading partners while China is expanding is pursuing a policy to advance its economic gains with new infrastructure programs and trade expansion across regions.
India currently faces US tariffs of up to 50% on some exports partly due to an elusive trade deal with Washington and partly due to high volume of commerce in Russian oil, while the EU is also trying to deal with ramifications of trade tariffs.
European exporters are expected to gain improved access for products such as cars and wine, while Indian industries including textiles, gems and pharmaceuticals will benefit from expanded access to European markets.
Europe and India are making history today.
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.
This is only the beginning.
We will grow our strategic relationship to be even stronger. pic.twitter.com/C7L1kQQEtr
— Ursula von der Leyen (@vonderleyen) January 27, 2026
The European Commission said the deal will eliminate or lower tariffs on 96.6% of goods traded by value. EU officials estimate the agreement could double European exports to India by 2032 and save companies around €4bn annually in duties.
“Europe and India are making history today,” von der Leyen said in Delhi on Tuesday after meeting Indian prime minister Narendra Modi.
“We have concluded the mother of all deals, establishing a free trade zone of two billion people with clear benefits for both sides.”
India, home to 1.4 billion people, is one of the world’s fastest-growing major economies and is projected by the International Monetary Fund to become the fourth largest globally this year.
Sharing my remarks during the India-EU Business Forum. https://t.co/MXJIaE7eE4
— Narendra Modi (@narendramodi) January 27, 2026
Modi hailed the agreement as one of the most comprehensive trade pacts India has ever signed, calling it “the biggest free trade deal in history” and noting that it spans roughly a third of global trade.
“This agreement creates enormous opportunities for 1.4 billion Indians and millions of Europeans,” Modi said. “It demonstrates the strength of cooperation between two major global economies.”
A central feature of the deal is a sharp reduction in India’s car tariffs, which will fall to 10% over five years from rates as high as 110%.
The changes will benefit European automakers including Volkswagen, Renault, Mercedes-Benz and BMW. Up to 250,000 EU-made vehicles will eventually be allowed into India at preferential rates—far exceeding the quota agreed under last year’s UK-India trade agreement.
Negotiations, first launched in 2007, had long been stalled by disagreements over automobiles, agriculture and dairy.
Muhammad Luqman is Associate Editor at Views News Now. He writes on wide-ranging issues including economy, South Asia, the Middle East, agriculture, economy and innovation. Luqman has worked some of the leading news organizations and won acclaim for his original and research-based works.
