India and EU clinch landmark trade agreement after years of talks, with big tariff cuts and mobility pact

India and the European Union on Tuesday, 27 January 2026, announced they had reached a landmark free trade agreement intended to reshape commerce between two major markets and reduce barriers on a vast range of goods. The deal, described by EU leadership as the “mother of all deals”, comes after negotiations that stretched across almost two decades and gained fresh urgency amid global trade uncertainty.

What the deal covers

Officials said the agreement aims to deliver free trade on almost all goods between India and the EU’s 27 member states, spanning categories from textiles and leather products to medicines and industrial items. Both sides framed the agreement as not just a trade package, but a wider partnership that also includes a framework for deeper defence and security cooperation and a separate pact designed to ease mobility for skilled workers and students.

Tariffs: big headline cuts, phased implementation

A central feature is the phased reduction of tariffs and duties, which have long been a key sticking point. The agreement is expected to reduce or eliminate tariffs for 96.6% of EU exports to India, while the EU will reduce tariffs on nearly 99% of goods imported from India by trade value, over time. One major headline is the planned cut to India’s high tariffs on EU-made cars, which are expected to gradually fall from 110% to as low as 10%, alongside other reductions across machinery, chemicals and pharmaceuticals. Tariffs on premium European wines are also expected to come down sharply through agreed terms and quotas.

Sensitive sectors kept out

Even as the deal widens access, it also reflects political sensitivities. India is keeping dairy products such as milk and cheese outside the agreement, along with certain cereals, citing domestic concerns. For its part, EU concessions will not extend to concessional tariffs for a set of Indian products including sugar, meat, poultry and beef, reflecting restrictions and sensitivities in Europe.

Why this deal now

The announcement comes as major economies face pressure from shifting tariff regimes and supply-chain realignments. Leaders in New Delhi and Brussels positioned the pact as a stabilising corridor between two large markets at a time when trade flows are being disrupted by wider geopolitical and economic tensions.

When it could take effect

While the agreement has been announced, it is expected to take months before it becomes operational. The process requires further legal work on the text and ratification steps, including in the European Parliament, before formal signing and implementation timelines are finalised.