India and the European Union (EU) have finalised a historic Free Trade Agreement (FTA), described as the “Mother of All Deals” because of its size and importance. The announcement came around India’s 77th Republic Day on January 26, 2026, when European leaders visited New Delhi, giving diplomatic significance to this economic milestone. The deal is expected to come into force in 2027, after legal review, formal signing, and ratification by both sides.
The FTA will give over 99% of India’s exports to the EU preferential access, meaning most Indian products can enter European markets with zero tariffs either immediately or over a few years. This will make Indian goods cheaper, more competitive, and easier to sell in Europe.
Key sectors that will benefit include gems and jewellery, textiles, leather, footwear, plastics, rubber, engineering products, marine goods, sports items, and toys. Gems and jewellery exports could nearly double to USD 10 billion (~₹91,000 crore) in three years, benefiting production hubs in Gujarat, Rajasthan, Maharashtra, and West Bengal. Tariffs on chemicals, plastics, rubber, and base-metal products will also be removed, supporting India’s manufacturing supply chains.
Before the FTA, India–EU trade was already significant. In 2024‑25, bilateral trade was around ₹11.5 lakh crore (~USD 136.5 billion), with ₹6.4 lakh crore (~USD 75.9 billion) in exports from India and ₹5.1 lakh crore (~USD 60.7 billion) in imports. The agreement will help Indian exporters diversify markets, especially as high U.S. tariffs had limited exports to North America.
The FTA also covers services trade. India will get access to 144 EU service sub-sectors, including IT, finance, education, professional services, and digital services. Rules for professionals moving to Europe will be clearer, including post-study work visas of at least nine months, which will help Indian students and skilled professionals. Traditional Indian wellness services like AYUSH will also get better market access.
Labour-intensive industries and MSMEs will benefit the most. With zero tariffs, textiles, leather, footwear, marine products, and sports goods can expand exports, creating jobs and supporting rural and urban clusters. Agriculture and processed food exports, such as tea, coffee, spices, grapes, vegetables, and processed foods, will become more competitive, supporting farmers’ incomes.
Sensitive sectors such as dairy, cereals, and poultry are protected to ensure domestic industries remain safe while other exports grow. The FTA will remove tariffs on 70.4% of lines immediately, while the rest will be phased out over 3–5 years, with some under Tariff Rate Quotas (TRQs). Simplified rules and self-certification of origin will make it easier for businesses, especially smaller ones, to export efficiently.
Sector-wise, India will benefit from: Machinery and electrical goods (up to 44% tariffs removed), aircraft and spacecraft (11%), medical equipment (27.5%), chemicals and iron/steel (up to 22%). Motor vehicles will have quota-based access (~10% duty). Gems and jewellery (22.5%), plastics (16.5%), and pharmaceuticals (11%) will enter the EU without duties. Processed foods, olive oils, wines, and spirits will also see major tariff reductions.
Strategically, this FTA links India’s 4th-largest economy with the EU’s 2nd-largest, covering ~2 billion people and a combined economy of USD 24 trillion. It strengthens India’s global trade strategy, diversifies export destinations, improves competitiveness, and encourages high-tech collaboration, clean energy, AI, and semiconductors.
In short, the India–EU FTA will boost exports, create jobs, strengthen MSMEs, expand services trade, and integrate India more deeply into global supply chains, marking a historic milestone in India’s economic growth and global trade position.