India and EU Finalise Comprehensive Free Trade Agreement After Two Decades of Talks
New Delhi, India : India and the European Union have concluded negotiations on a free trade agreement after nearly two decades of intermittent talks. The pact aims to liberalise trade across most goods and services, covering close to ninety seven percent of traded value, while excluding sensitive agricultural and dairy sectors on both sides. European tariffs on a majority of Indian exports are set to fall to zero, while India will gradually lower duties on products such as automobiles, wines, machinery, chemicals and pharmaceuticals, largely through phased reductions and quota systems. Leaders described the agreement as economically significant and strategically important amid global trade uncertainty. Alongside the trade deal, the two sides announced frameworks on security cooperation, labour mobility and research collaboration. The agreement now awaits review and ratification by EU institutions and the Indian government before entering into force.
India and the European Union have concluded negotiations on a long pending free trade agreement, marking the end of a process that began in 2007 and moved forward unevenly for nearly two decades. The agreement was finalised following intensified talks over the past year and was announced after meetings between Indian Prime Minister Narendra Modi, European Commission President Ursula von der Leyen, and European Council President António Costa. Officials on both sides described the pact as the most comprehensive trade agreement either party has concluded. The deal seeks to significantly expand market access, reduce tariffs, and deepen economic engagement between two of the world’s largest economies. It now moves into a legal review and ratification phase that includes approval by the European Parliament, EU member states, and the Indian cabinet before it can enter into force.
Under the agreement, the European Union will eliminate or reduce tariffs on nearly all Indian exports by trade value, with a large share of duties dropping to zero when the pact takes effect. These changes are expected to benefit Indian sectors such as textiles, apparel, leather goods, footwear, gems and jewellery, chemicals, plastics, marine products, and certain agricultural and processed food items. India, in return, will phase down tariffs on most European exports, including machinery, electrical equipment, automobiles, chemicals, pharmaceuticals, medical devices, and selected agricultural goods. Tariff reductions on sensitive products such as cars and wines will be managed through quota based systems and gradual implementation over several years. Both sides excluded politically sensitive sectors, including dairy and certain agricultural products, reflecting long standing domestic concerns.
Beyond goods trade, the agreement includes commitments on services, investment, and regulatory cooperation. The European Union has offered market access across a broad range of services sectors, including information technology, professional services, education, and business services. India has made reciprocal commitments in areas such as telecommunications, financial services, maritime services, and environmental services. Officials from both sides have emphasised that the agreement aims to improve predictability, reduce non tariff barriers, and support integration into global supply chains. Separate but parallel frameworks were also announced covering labour mobility for skilled professionals and short term workers, as well as cooperation in research and innovation. In addition, India and the EU signed their first security and defence partnership, covering maritime security, cyber threats, counterterrorism, and information sharing.
The conclusion of the trade agreement comes amid a period of heightened uncertainty in the global trading system. Both India and the European Union have faced higher tariffs and trade pressures from the United States in recent years, as well as broader concerns over supply chain resilience and strategic dependence. While leaders avoided explicit references to third countries in their formal statements, analysts widely view the agreement as part of a broader effort by both sides to diversify economic partnerships and reinforce a rules based international trading order. Despite the political momentum behind the deal, its implementation faces several challenges, including regulatory alignment, concerns related to carbon border measures, and the ratification process within the European Union. Business groups have broadly welcomed the agreement, while some industry and agricultural stakeholders have urged close scrutiny as the final legal text is prepared and debated.