Published by Global Banking & Finance Review®
Posted on January 26, 2026
3 min readLast updated: January 26, 2026
Add as preferred source on GoogleIndia and the EU have finalized a landmark trade deal, enhancing economic ties amid strained US relations. The agreement aims to boost trade and investment.
By Shivangi Acharya
Jan 26 (Reuters) - India and the European Union have concluded negotiations on a long-coveted trade deal that will be announced on Tuesday, the South Asian nation's trade secretary said on Monday, an accord both sides hailed as historic as they contend with strained U.S. ties.
The deal paves the way for free trade of goods between the bloc of 27 European nations and India, which together make up a quarter of the world's gross domestic product and a market of 2 billion consumers.
"It will be a balanced, forward-looking deal for better economic integration with the EU. The deal will propel trade and investment between both sides," said India Trade Secretary Rajesh Agrawal.
Trade between the two sides stood at $136.5 billion in the fiscal year through March 2025.
FLURRY OF TRADE DEALS
The formal signing would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter said.
"We expect the deal to be implemented within a year,” the official added.
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 agreements 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 countries test longstanding alliances among Western nations.
After nearly two decades of on-off negotiations, the deal will see India open up its vast and guarded market, the world's largest, to free trade with the EU, its biggest trading partner.
FAST-TRACK TALKS AGREED LAST YEAR
India and the EU pushed to close the deal after Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed to fast-track negotiations last year.
Two-way talks, relaunched in 2022 after a nine-year lull, gathered momentum after Trump imposed import tariffs on several trading partners, including a 50% tariff on goods from India.
An India-U.S. trade deal collapsed last year after a breakdown in communication between their two governments.
Both the EU and India had been locked in last-minute give and take over cars and steel trade, among the final points of contention.
The EU had sought sharp cuts by India in import duties on its cars that can exceed 100%, while India - a major steel producer - has been pushing the EU to reduce trade curbs to its steel exports.
Reuters reported on Sunday that India was planning to slash tariffs on cars imported from the EU to 40% from as high as 110% as part of the deal.
Negotiations excluded some sensitive farm and dairy items, as New Delhi maintains the need to protect millions of subsistence farmers.
(Reporting by Shivangi Acharya and Kanjyik Ghosh; Editing by Clarence Fernandez, Alexandra Hudson and Emelia Sithole-Matarise)
Economic integration is the process by which countries reduce trade barriers and increase economic cooperation, often leading to the formation of trade blocs or agreements.
Foreign investment refers to the investment made by individuals or entities in one country into business interests in another country, often to gain a financial return.
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