Finance
India, EU finalise landmark trade deal, PM Modi says
Published by Global Banking and Finance Review
Posted on January 27, 2026
2 min readLast updated: January 27, 2026
Quick Summary
India and the EU have finalized a landmark trade deal, covering a quarter of the global economy, after nearly two decades of negotiations.
India and EU Conclude Historic Trade Agreement, Says PM Modi
Overview of the India-EU Trade Agreement
NEW DELHI, Jan 27 (Reuters) - India and the European Union have finalised a landmark trade deal that will represent a quarter of the world's economy, Indian Prime Minister Narendra Modi said on Tuesday, as the two sides seek to hedge against fickle ties with the U.S.
Background of Negotiations
After nearly two decades of on-off negotiations, the deal will pave the way for India to open up its vast and guarded market, the world's largest, to free trade with the 27-nation EU, its biggest trading partner.
Economic Impact and Future Prospects
Trade between India and the EU stood at $136.5 billion in the fiscal year through March 2025.
Global Trade Context
The agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.
During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.
The spate of deals underscores global efforts to hedge against the United States as President Donald Trump's bid to take over Greenland and tariff threats on European nations test longstanding alliances among Western nations.
Trump has imposed a 50% tariff on goods from India and an India-U.S. trade deal collapsed last year after a breakdown in communication between the two governments.
The formal signing of the India-EU deal would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter has said.
"We expect the deal to be implemented within a year," the official added.
(Reporting by Shivangi Acharya and Manoj Kumar, Editing by Raju Gopalakrishnan)
Key Takeaways
- •India and EU finalize a landmark trade deal.
- •The agreement covers a quarter of the world's economy.
- •Negotiations spanned nearly two decades.
- •Trade between India and EU was $136.5 billion in 2025.
- •The deal aims to hedge against US trade uncertainties.
Frequently Asked Questions about India, EU finalise landmark trade deal, PM Modi says
1What is economic impact?
Economic impact refers to the effect that an event, policy, or trade agreement has on the economy, including changes in employment, income, and overall economic growth.
2What are financial markets?
Financial markets are platforms where buyers and sellers engage in the trade of financial assets such as stocks, bonds, currencies, and derivatives.
3What is the global economy?
The global economy refers to the interconnected economies of countries around the world, influenced by international trade, investment, and financial markets.
