Strategic Convergence & Economic Pragmatism: The India-EU Free Trade Agreement - A Report

India and the European Union, after almost two decades, finally, on January 27th of 2026, concluded their negotiations for a free trade agreement, which has been, by the European Commission President Ms Ursula von der Leyen, more popularly called the “Mother of all Deals.”

Cover by The Geostrata

The announcement came shortly after the successful 16th India-EU Summit in New Delhi, attended by Indian PM Narendra Modi alongside the European Commission President H.E. Ursula von der Leyen and the European Council President H.E. Antonio Costa.

This “Mother of all Deals,” as remarked by Ms. von der Leyen, is a truism given the India-EU FTA is the largest economic agreement either side has ever concluded, with a combined market of almost 2 billion people and comprising 25% of the global GDP.

In a way, the deal will prove to be New Deal 2.0 for Europe, but this time, the European Union is in command.

The agreement, when viewed against the backdrop of a ruptured global economic and political order and in the context of the “Towards 2030: A Joint India-European Union Comprehensive Strategic Agenda,” paints a clear picture around trade diversification and strengthening economic security while presenting a shift away from single-source dependencies of the first half of the 21st century, which came as part and parcel of globalization.

The agreement further presents both India and the EU with a win-win partnership, wherein the EU’s quest for trade diversification and greater market access, along with high and standardised trade regulatory frameworks, gets complemented by India’s “Make in India” and domestic manufacturing ambitions in the higher end of the value chain. The FTA, with its scope and proximity, presents the Indian economy with a chance at competing globally while ensuring its domestic demands are being met.

TRADE IN GOODS: MARKET ACCESS AND TARIFFS

The agreement is set to provide India with preferential access into the European markets across 97% of tariff lines, covering  99.5% of its trade value. The labour-intensive sectors, including textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery, and export-quality marine products, are set to benefit the most. This development must be viewed alongside the fact that these labour-intensive sectors were the worst-hit when the US, under President Donald Trump, slapped a 25% tariff on Indian exports to the US in mid-2025.

Additionally, 2.9% of India’s exports will gain zero-duty access over 3 and 5 years for certain marine products, processed food items, arms and ammunition, amongst others. The final 6% of the remaining export value from India will have access by way of tariff reduction for certain poultry products, preserved vegetables, bakery products, etc, or through tariff rate quotas, as was widely reported during the negotiations, especially for cars, steel, specific shrimp/prawn products, amongst others.

Key labour-intensive sectors, such as those mentioned in the first bracket, were hitherto subjected to 4%-26% of import duty, and which are critical to India’s employment generation and sustenance, will now enter without paying any duty once the agreement comes into force, further enhancing export competitiveness of such products in the EU markets.

These sectors are set to gain substantially through integration with global value chains by way of their performance and competitiveness in the European markets.

India has reciprocated by offering tariff reduction in 92.1% of its tariff lines, covering almost 98% of all EU exports, wherein almost 50% of tariff lines will have immediate duty elimination, the next 40% tariff lines are subject to phased elimination over 5, 7, and 10 years, and the final 3% will follow the tariff rate quota mechanism, especially for apples, pears, peaches, and kiwi fruit.

High technological imports from the EU will help the Indian industry climb up the global value chains, diversify import sources (a market dominated by China, especially in the middle to high-tech electronics), reduce their input costs, further push internal industry reforms and enhance integration into global supply chains through enhanced global competitiveness. 

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For all official and academic purposes, use the following as a citation, which follows the Chicago Manual Style.

Digvijay Singh, Darshan Gajjar, and Fyodor Dmitrenko

“Strategic Convergence & Economic Pragmatism:

The India-EU Free Trade Agreement”

THE GEOSTRATA, January 30, 2026.

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BY DIGVIJAY SINGH, DARSHAN GAJJAR,

AND FYODOR DMITRENKO

TEAM GEOSTRATA

info@thegeostrata.com