India-EU ͏Trade Deal Signed: Tariffs Slashed On 96% ͏Goods As ‘Mother Of All’͏ Pact Draws US Attention

New Delhi, 28 January 2026: India and the European Union have announced the conclusion of the long-pending free trade agreement, touted by both sides leaders as the “mother of all” trade deals, signifying a major shift in global trade alliances. The deal will cut or reduce duties on more than 96% of EU goods exports to India, while offering Indian exporters preferential access to 97% of the EU’s tariff lines that cover nearly 99.5% bilateral trade value.  

Trade Pact Covers 1.9 Billion͏ Consumers, 25% Global GDP 

The agreement creates a combined market of nearly 1.9 billion people, accounting for approximately 25 per cent of the global gross domestic product and one-third of global͏ trade. Following a nine-year break, negotiations were re-launched in June 2022 and brought to a successful conclusion at a Summit in New Delhi attended by Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President Antonio Costa, establishing the biggest trade agreement to date.  

EU Goods See 96.6% Tariff Cuts, €4 Billion Annual Savings 

According ͏to the press release of the European Union, tariffs on 96.6 per cent of EU goods exported to India will be eliminated or reduced, generating͏ annual duty saving of up to €4 billion. The agreement also includes improved EU access to India’s financial and maritime services, enhanced customs procedures, stronger intellectual property protection, and targeted provisions related to small and medium-sized enterprises to ease compliance and market entry.  

Cars, Wine and Chocolate Get Cheaper as Duties Fall Sharply  

For Indian ͏consumers, the trade deal will gradually reduce the import costs on products from Europe. Tariffs on cars will be gradually reduced from 110 per cent to as͏ low as 10͏%, while wine tariffs will decline ͏from 150 per cent to 20 per cent. Processed food including pasta, bread, biscuits, and chocolate currently taxed at about 50 per cent will witness duties eliminated. Tariffs on olive oil, fruit juices and non-alcoholic beer, will also be eliminated.  

Indian Exports Gain Zero Duties On 93% Goods In Seven Years  

On ͏the Indian side, the execution of the agreement, anticipated in early 2027 post legal vetting and regulatory approvals, would lead to immediate relief duty elimination for 70.4% of the tariff lines covering 90.7% of India’s exports to the EU. 93% of Indian goods will attract zero tariffs, while partial and quotas will apply to around 6% of exports, over a period of seven years.  

Few major Indian exports such as marine products (up to 26%), chemicals (12.8%), leather and footwear (17%), textile (12%), apparel (4%), base metals (10%), and gems and jewellery (4%) would see tariffs brought down to zero. Sensitive sectors such as autos and agriculture continue to be shielded from full tariff elimination.  

Global͏ Trade Realignment As ͏US Traiffs Remain Elevated 

The agreement͏‘s timing has drawn attention in Washington. US Treasury Secretary Scott Bessent raised concerns about India’s oil trade with Russia soon after the announcement. US president Donald Trump had imposed 25% tariffs and penalties, on Indian imports, while similar duties were imposed on EU steel and aluminium. Against this backdrop, Ursula von der Leyen said the deal “makes history,” creating a two-billion-person free trade ͏zone. 

On Tuesday, Sensex Rose ͏32͏0 Points, Nifty Above 25,17͏5 As Trade ͏Deal Lifts Mood 

Indian equity benchmarks closed ͏higher on Tuesday after a volatile session, supported by improved sentiment getting a fillip on the announcement of the India-EU free trade pact. The Sensex rose 319.78 points or 0.39 per cent to close at 81,857.48 and the Nifty 50 gained 126.75 points or 0.51 per cent to close at 15,175.40. Broader indices also mirrored the positive momentum, with the Nifty Midcap 100 gaining 0.59% and the Nifty Smallcap 100 was up 0.41% by the end of the session.  

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