India / European Union Free Trade Agreement

The European Union and India finalized a free trade agreement on January 27, 2026, which will be fully ratified within five to six months. In 2024, European Union exports to India equaled €75bn. India exported €89.8bn to European Union countries. This is the largest ever trade agreement for both parties.

Key benefits

• Eliminates destructive tariffs, crushes inflation, and promotes capitalism

• Brings two of the largest economies closer together

• Diminishes increasing geopolitical tensions

• Agreement covers nearly two billion people and 25% of global economic output

• Stabilizes costing and the ability to forecast future business dealings

• Decreases dependence on the United States and China

Overall tariff reductions

• Sweeping reductions on both sides

• India to reduce duties on 96.6% of EU goods exported

• EU will liberalize 99.5% of its tariffs on goods imported from India

Tariff reductions on non-food European exports

• Machinery and electrical equipment valued at €16.3bn are currently subject to 44% tariff but will be mostly eliminated over five to seven years

• Aircraft and spacecraft exports at €6.4bn were tariffed at 11% but will be mostly eliminated within ten years

• EU chemical exports at €3.2bn are currently subject to tariffs of up to 22%. Most tariffs will be immediately eliminated

• Pharmaceutical exports at €1.1bn are currently subject to tariffs of 11%. These will be fully eliminated over five to seven years.

• The largest percentage of savings will come from vehicles. Tariffs will fall from 110% to as low as 10%, and car parts will eventually become tariff-free. India is the world’s fastest-growing large automotive market.

Tariff reductions on European food and alcohol exports

• Currently, Indian tariffs on agri-food products average 36% and can reach 150%

• In 2024, EU agri-food exports to India were worth just €1.3bn, only 0.6% of the EU’s global agri-food trade

• Wine exports currently face tariffs of 150% but will be cut to between 20% and 30%

• Spirits currently face tariffs of up to 150 but will be cut to a flat 40%

• Beer tariffs will decrease from 110% to 50%

• Olive oil tariff of 45% will be fully eliminated

• Kiwis and pears tariff of 33% will decrease to 10%

• Fruit juices and non-alcoholic beer tariff of 55% will become zero

• Processed food (breads, pastries, biscuits, pasta, chocolate, pet food) will drop from 50% to zero

• Sheep meat will go from 33% to zero

• Sausages and other meat preparations will drop from 110% to 50%

• Confectionery products will also enjoy steep tariff reductions

European imports of Indian goods

• European Union imported a total of €89.8bn worth of goods from India in 2024

• The largest import category was electrical machinery and equipment, including sound and television recording devices, with imports valued at €13.4bn

• Organic chemicals were valued at €11.9bn

• Machinery and mechanical appliances, including nuclear reactors and boilers, totaled €8.6bn

• Iron and steel shipments amounted to €6.2bn

• Pharmaceutical products accounted for €4.7bn

• Articles of apparel and clothing accessories reached €3.6bn

• Textiles, apparel, marine, leather, footwear, chemicals, plastics, sports goods, toys, gems, and jewelry will incur zero duty once the free trade agreement comes into force. These products account for $33 billion in exports. Before the deal, the EU tariffed them at rates of between 4% to 26%.

Progression

• The FTA will now go through legal revision and translation into all EU languages

• The European Commission will submit it to the Council and European Parliament for approval

• India will ratify the deal domestically

• Once ratified by both sides, the agreement will enter into force, with tariff reductions phased in over a period of up to ten years.

A massive trade agreement with India provides Europe a high level of economic resilience. India’s economy is growing at over 6% annually. With a young population of 1.45 billion people, the trade agreement promises the EU a strategic partner in a region increasingly considered to be central to global economic strength and rapid growth. The deal is widely expected to double EU exports to India by 2032. In this new era of unstable trade relations, the EU-India free trade agreement provides a high percentage of overall business stability for two of the world’s largest democracies.