Update as per January 28, 2026
On 27 January, during the 16th India–EU Summit, India and the European Union officially concluded negotiations on the Free Trade Agreement. The announcement was made by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, marking the end of a negotiation process that has spanned more than a decade.
The agreement brings together the world’s fourth-largest economy and second-largest economy, covering around 25% of global GDP, and sets the framework for deeper economic cooperation between the two regions.
What Has Been Agreed
The EU–India Free Trade Agreement delivers broad tariff liberalisation, improved market access, modern rules of origin, and enhanced customs cooperation, while preserving key sensitivities on both sides.
Tariff liberalisation
- The EU will eliminate tariffs on more than 90% of tariff lines, covering 91% of trade value
- India will eliminate tariffs on 86% of tariff lines, covering 93% of trade value
- With partial liberalisation included, total coverage reaches 99.3% for the EU and 96.6% for India
This level of coverage reflects the depth of the agreement and its potential impact on bilateral trade flows.
Sector-Level Impact
India has committed to reducing or removing high industrial tariffs across a wide range of EU export sectors, many of which will see changes at entry into force or through staged reductions:
- Chemicals and cosmetics: tariffs up to 22%, largely removed or phased out over 5–7 years
- Plastics and car parts: phased liberalisation over 7–10 years
- Textiles, apparel, ceramics, boats: most tariffs removed at entry into force
- Machinery: around half liberalised immediately, with remaining tariffs phased out over time
For agri-food products, the agreement introduces significant tariff reductions for selected EU exports, including olive oil, processed foods, fruit juices, and pet food, while alcoholic beverages will see tariffs reduced from current levels of up to 150% to defined rates for wine, spirits, and beer.
At the same time, the EU has preserved protection for its most sensitive agricultural sectors, including sugar, rice, beef, poultry, dairy products, bananas, and honey.
Rules of Origin and Customs Cooperation
The agreement introduces modern and robust rules of origin, aligned with recent EU free trade agreements. Key elements include:
- Exporter self-certification of origin
- Use of a statement on origin submitted through a dedicated system
- Structured customs cooperation and verification between EU and Indian authorities
- Administrative cooperation before any denial of preferential treatment
These provisions aim to simplify the use of preferences, particularly for small and medium-sized enterprises, while maintaining control and auditability.
What This Means in Practice
With negotiations now concluded, attention will shift toward implementation timelines, staging schedules, and operational readiness. For trade teams, the focus moves from anticipation to preparation: understanding which products are affected, how origin must be demonstrated, and how new tariff treatments will be applied in customs processes.
Further details are expected to be published by the European Commission as the agreement moves toward signature and entry into force. For more details, please refer European Commission, or reach out to discuss your EU–India readiness in your business.
January 20, 2026
The European Union and India are preparing to finalize one of the most significant trade agreements of recent decades. During the 16th India–EU Summit on 27 January, leaders from both sides are expected to conclude negotiations on the long-awaited EU–India Free Trade Agreement, formally known as the Broad-based Trade and Investment Agreement (BTIA).
If signed, this agreement would become the EU’s largest trade deal to date, opening access to a market that represents roughly 25 percent of the world’s population.
A Long Negotiation Nears the Finish Line
Negotiations between the EU and India began in 2007, stalled for several years, and were officially relaunched in 2022. Momentum increased significantly in 2025, following high-level political engagement and a renewed focus on economic cooperation.
According to government sources, 20 of the 24 negotiation chapters are already closed. Only a limited number of sensitive topics remain, with both sides signaling that the final phase is now underway.
European Commission President Ursula von der Leyen recently described the agreement as a “massive signal” for EU trade relations, confirming that agriculture will be excluded from the final package. This exclusion has been clear from the start of negotiations and removes one of the most complex hurdles.
Key Areas Covered by the Agreement
The EU–India FTA focuses on several core pillars that will directly affect importers, exporters, and supply chain operators.
- Market access and tariffs
The agreement aims to reduce or eliminate tariffs on a wide range of industrial goods, including textiles, chemicals, machinery, steel, pharmaceuticals, and leather products. Indian exporters are expected to benefit in sectors such as garments and pharmaceuticals, while EU exporters gain improved access for machinery, aircraft, and chemicals. - Services and investment
Both parties seek to increase services trade and foreign direct investment. This includes improved market access, greater regulatory transparency, and stronger protections for investors on both sides. - Carbon and environmental measures (CBAM)
One of the most sensitive topics remains the EU’s Carbon Border Adjustment Mechanism. The EU intends to apply CBAM to imports of carbon-intensive goods, while India continues to raise concerns around fairness and the impact on developing economies. How this issue is addressed will be critical for manufacturers and exporters in energy-intensive sectors. - Geographical indications
Protection of geographical indications such as Champagne and Basmati rice is being addressed through a parallel agreement, ensuring recognition of regional origin and product authenticity. - Safeguards for farmers and SMEs
Both sides have reaffirmed their commitment to protecting farmers and small and medium-sized enterprises in sensitive sectors, balancing market access with domestic stability.
What This Means for Businesses Trading Between the EU and India
Once in force, the agreement will reshape EU–India trade flows. Tariff reductions, new origin rules, and expanded services access will create opportunities, but also introduce new compliance requirements.
Companies will need to reassess:
- Product classification and duty structures
- Rules of origin and origin documentation
- CBAM exposure for carbon-intensive goods
- Data quality, reporting, and audit readiness
- Broker instructions and customs filing processes
Early preparation will be essential to avoid delays, incorrect duty claims, or missed benefits under the agreement.
Three Questions to Ask Now
- Which products will change duty treatment?
- Can we prove origin fast and consistently?
- Are we ready for CBAM related data and reporting?
If these are open points, we can help you turn them into a clear action plan. Reach out to discuss your EU–India readiness.