The India-EU Free Trade Agreement (FTA) is a comprehensive trade pact, a type of international concept and legal agreement, between the Republic of India and the 27-nation European Union (EU). Its core purpose is to liberalize trade and investment by reducing or eliminating trade barriers, thereby strengthening long-term economic cooperation. Negotiations for the agreement, initially called the Broad-based Trade and Investment Agreement, began in 2007 but stalled in 2013 due to disagreements over issues like tariffs and intellectual property rights. The talks were officially relaunched in July 2022 amid a shared strategic need to diversify supply chains and deepen economic ties, solving the problem of high tariffs and market access restrictions.
The agreement, which was announced on January 27, 2026, after nearly two decades of negotiation, is often described as the "mother of all deals" due to the combined $27 trillion market it connects. It works by committing both sides to phased tariff reductions across a substantial majority of goods. Specifically, the EU will liberalize 99.5% of its tariffs on goods imported from India, while India will reduce or eliminate tariffs on 96.6% of EU exports over seven years. Key provisions cover goods, services, investment protection, intellectual property rights, digital trade, and sustainable development. For instance, India will lower its high tariffs on European automobiles and spirits, while the EU will drop duties on Indian textiles, leather goods, and IT services.
The FTA connects to the EU's Carbon Border Adjustment Mechanism (CBAM), which came into effect on January 1. The final text includes a separate annexure and a comprehensive work plan to address Indian concerns, especially for Micro, Small, and Medium Enterprises (MSMEs), regarding CBAM compliance and the embedded carbon reporting requirements. The agreement is currently in the legal scrubbing stage and is expected to be signed and implemented from 2027. The core structure of the FTA, covering over twenty policy areas, has stayed the same, but the inclusion of a dedicated framework for the EU's new environmental trade measure, CBAM, represents a significant recent change.