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India-EU trade deal: Europe to save €4B in duties
28 Jan 2026

India and the European Union (EU) have sealed a major free trade agreement (FTA), which is expected to save European exporters up to €4 billion (approximately $4.7 billion) annually on import duties.

The deal, which took nearly two decades of negotiations, is the largest trade opening India has ever given to any partner.

It comes as both sides seek strategic advantages amid rising geopolitical and economic uncertainties.

India to cut tariffs on nearly 97% of EU goods
Tariff reductions

The FTA will see India cutting or eliminating tariffs on 96.6% of EU goods exports.

This includes major sectors such as automobiles, machinery, chemicals, pharmaceuticals, agri-food products and industrial equipment.

The European Commission has said these tariff cuts will give European firms a major competitive advantage in India.

India's high import duties to be reduced
Duty reductions

India currently has some of the highest import duties in the world, with tariffs as high as 110% on cars, 44% on machinery, 22% on chemicals and 11% on pharmaceuticals.

However, under the FTA, these duties will be gradually reduced or eliminated over transition periods of up to 10 years.

For instance, car tariffs will be reduced from 110% to 10%, subject to an annual quota of 250,000 vehicles.

FTA to benefit European industry and agri-food exporters
Industry benefits

The FTA promises major benefits for the European industry, with tariffs on machinery and electrical equipment set to be eliminated for nearly all products.

Tariffs on chemicals, pharmaceuticals, iron and steel, aircrafts, plastics and medical devices will also be phased out.

Agri-food exporters will also benefit from reduced Indian tariffs on wines and olive oil over a five-year period.

FTA creates a free trade zone for 2 billion consumers
Trade zone

The FTA creates a free trade zone for nearly two billion consumers, accounting for nearly a quarter of the world's GDP.

It is being hailed as the largest trade agreement ever concluded by either party.

European Commission President Ursula von der Leyen called it a testament that "rules-based cooperation still delivers" amid fracturing global supply chains and slowing trade.

FTA grants EU firms preferential access to India's services market
Market access

The FTA also gives EU firms preferential access to India's services market, including financial services and maritime transport.

These commitments are more than what India has offered in its deals with the UK and Australia.

For the first time, India has also bound market access for dredging and maritime cable-laying services under this pact.