A Historic Leap: India and EU Ink ‘Mother of All Trade Deals’
On January 27, 2026, India and the European Union made history by concluding a landmark free trade agreement. This monumental pact, referred to by officials as the “mother of all deals”, establishes a free trade zone encompassing 2 billion people and accounting for approximately a third of global trade.
The announcement of this historic agreement was made in New Delhi by European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi. The culmination of nearly two decades of negotiations, the deal is set to eliminate or significantly reduce tariffs on over 96% of goods traded between the two economies. This could potentially lead to savings of up to €4 billion ($4.74 billion) annually in duties on European products.
As per the agreement, Indian tariffs on European automobiles will plummet from 110% to a mere 10%, with an annual quota set for 250,000 vehicles. European wine tariffs will see a drastic cut from 150% to a range of 20-30%, while spirits will enjoy reductions to 40%. Meanwhile, India’s key labor-intensive sectors, including textiles, apparel, gems, jewelry, leather, and footwear, will be subject to zero duty upon the deal’s implementation.
This strategic agreement comes at a time when both economies are grappling with the pressure from U.S. tariff policies. India’s Commerce Minister Piyush Goyal anticipates the agreement to generate six to seven million jobs in the textile sector alone. The EU, on the other hand, expects the deal to double its exports to India by 2032.
Source: CNBC