After nearly twenty years of negotiations, India and the European Union have concluded a major Free Trade Agreement, marking one of the most significant trade deals for both sides. Prime Minister Narendra Modi announced the development on January 27, 2026, calling it the “mother of all deals”. The agreement covers economies that together account for about 25% of global GDP and nearly one third of total global trade.
The Prime Minister said the deal will provide a strong push to India’s manufacturing sector while opening new doors for growth in services. He noted that it will raise economic confidence among investors and producers in India and across Europe. Officials believe the agreement will improve market access and strengthen long term economic engagement between the two regions.
The manufacturing sector is expected to see a sharp boost as Indian producers gain wider entry into the 27 member European Union market. Key industries such as machinery, textiles, leather goods and automotive components are likely to benefit. India’s services sector, including information technology, financial services and business outsourcing, is also expected to expand its footprint across Europe, supporting higher exports and job creation. Analysts say the pact could attract stronger foreign investment flows into India as it offers a stable and predictable trade framework.
Leaders on both sides have described the agreement as a symbol of deeper strategic cooperation. PM Modi called it a “perfect example of partnership between two major economies,” highlighting ties that go beyond trade. The agreement will now undergo legal vetting in India and approval by European Union institutions. Formal signing is expected within the next few months, with implementation possible within 1 year. Initial reports suggest tariff reductions on several industrial products, including automobiles, while sensitive sectors such as dairy and select agricultural goods may remain protected. The deal follows other recent trade agreements with the European Free Trade Association and the United Kingdom, aligning with India’s strategy to diversify exports amid global economic uncertainty.
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