India and EU Seal Landmark Free Trade Deal After Decades of Talks
India and the European Union have finalised a long-awaited free trade agreement, marking a major step in their economic ties. The deal, announced on 16 February, comes after nearly two decades of negotiations. It positions the EU as India's 22nd FTA partner and opens new opportunities for businesses on both sides.
The agreement was concluded on 27 January 2026 but has yet to take effect. Before it does, the EU Council must approve it, followed by signing and ratification from both the European and Indian parliaments. No firm date for implementation has been set, and no economic changes have occurred since the deal was struck.
The pact grants Indian exporters and entrepreneurs full access to the European market. It also deepens India's reach into 144 EU services sub-sectors, with Germany and other major EU economies expected to benefit significantly. Unlike India's other trade deals, this one offers the EU unique tariff concessions not extended to previous partners.
This development follows a period of rapid trade expansion for India. Over the past five years, the country has signed seven FTAs and Comprehensive Economic Partnership Agreements (CEPAs) with key global partners. The EU deal adds to this momentum, potentially attracting more foreign investment and influencing other trade negotiations. The US, for example, has already reduced tariffs on certain Indian goods.
The agreement also aligns with India's broader economic goals. Finance Minister Nirmala Sitharaman presented the 2026-27 budget on 1 February, aiming to keep the country on course to become a US$5 trillion economy by 2028-29. The partnership combines India's scale and growth with Europe's capital, advanced manufacturing, and regulatory expertise.
For the EU, this deal reinforces its strength in bilateral trade, coming shortly after the EU-Mercosur agreement signed in January 2026.
The India-EU FTA sets the stage for deeper economic cooperation between two major global players. Once ratified, it will provide Indian businesses with expanded market access and could reshape trade flows. The deal also underscores India's push toward its US$5 trillion economy target by the end of the decade.
