India and the European Union are expected to declare the conclusion of negotiations for the India EU FTA on Tuesday, January 27, 2026. This follows Prime Minister Narendra Modi’s meeting with European Council President Antonio Costa and European Commission President Ursula von der Leyen at the India EU summit 2026 in New Delhi. The pact addresses tariffs on cars, wine, textiles, and chemicals, alongside pacts on security and mobility.
The India EU FTA holds significant implications for South Asia. It could reshape regional trade patterns, enabling Indian exporters to gain ground in textiles and garments against competitors like Bangladesh and Pakistan. With the EU importing $125 billion in textiles yearly, India’s 5-6% market share may expand, potentially diverting opportunities from other South Asian nations reliant on similar sectors.
Key Elements of the India EU Trade Deal
Negotiations for the India EU free trade agreement restarted in 2022 after a nine-year break. They gained momentum in 2025 due to rising global tensions, including US tariffs on Indian goods reaching 50% in August. The India EU trade deal aims to cut tariffs on European automobiles and wine, while opening EU markets for Indian electronics, textiles, pharmaceuticals, and chemicals.
An EU official stated the bloc seeks to “conclude negotiations on the free trade agreement” during the India EU summit 2026. If ratified by the European Parliament, a process that could last at least a year, the India EU FTA would enhance bilateral trade, which stood at $136.5 billion in the fiscal year ending March 2025.
India has expressed concerns over non-tariff barriers, including the EU’s carbon border adjustment mechanism on imports like steel, aluminium, and cement. The EU’s extension of the suspension of Generalised System of Preferences benefits for another two years affects $1.95 billion in Indian exports. The India EU trade deal could mitigate these losses.
Challenges in Finalising the India EU Free Trade Agreement
Differences persist on sensitive issues. An EU government source noted: “Negotiators are still trying to bridge differences on several sensitive issues, including India’s reluctance to sharply cut tariffs on auto imports.” Lower duties would aid European firms like Volkswagen and Renault in India’s vast car market.
Certain agricultural products have been excluded from talks, according to an Indian trade ministry official. The India EU FTA focuses on industrial goods and services to balance interests.
At the World Economic Forum in Davos on Tuesday, January 20, 2026, von der Leyen said the EU was “on the cusp of a historic trade agreement” with India, calling it the “mother of all deals” that would create a market of two billion people. She acknowledged that “work remains to get it over the line.”
Background on India EU Trade Relations
India and the EU have pursued deeper ties since the 1994 Cooperation Agreement. The India EU free trade agreement negotiations, formally known as the Broad-based Trade and Investment Agreement, aim for comprehensive coverage in goods, services, investment, and intellectual property.
Recent high-level engagements accelerated progress. In February 2025, von der Leyen and Modi agreed to conclude talks by year’s end. Union Commerce Minister Piyush Goyal visited Brussels on January 8-9, 2026, for discussions with the EU Commissioner for Trade and Economic Security to expedite the India EU trade deal.
The India EU summit 2026, from January 25 to 28, will co-chair Modi, Costa, and von der Leyen. Besides the India EU FTA, leaders plan to sign a security and defence pact—Europe’s third in Asia after South Korea and Japan—and a mobility agreement for skilled workers and students.
Bilateral trade has grown steadily. The EU ranks as India’s largest trading partner, ahead of the US and China in some metrics. Services trade hit €59.7 billion in 2023, up from €30.4 billion in 2020.
Analysts highlight potential gains. Ajay Srivastava from the Global Trade Research Initiative said: “An India-EU FTA would cut tariffs on textiles, garments and leather, letting Indian exporters compete more evenly with Bangladesh and Vietnam.”
The pact aligns with India’s recent agreements with Britain, New Zealand, and Oman, and the EU’s deals with Mercosur. It serves as a hedge against US policies under President Donald Trump, who has imposed high tariffs and tested alliances.
What’s Next for the India EU FTA
Post-announcement, both sides will proceed with internal approvals. The EU requires parliamentary ratification, while India needs cabinet and parliamentary nods. Full implementation may start in 2027.
Experts predict the India EU trade deal could boost Indian exports by offsetting US tariff impacts. For South Asia, it may prompt other nations to seek similar EU access. Monitoring ratification progress will be key.
The India EU FTA marks a pivotal step in economic partnership, fostering resilience in uncertain global trade.
Published in SouthAsianDesk, January 24th, 2026
Follow SouthAsianDesk on X, Instagram and Facebook for insights on business and current affairs from across South Asia.
