In a landmark move set to redefine bilateral trade, India and the European Union have officially unveiled a comprehensive free trade agreement. The pact, announced on Tuesday, January 27, 2026, will dramatically reduce or eliminate import duties on an unprecedented 97 percent of goods exported from the EU to India, creating an estimated annual duty savings of up to €4 billion ($4.75 billion).
The agreement specifically targets several high-tariff sectors, signaling a new era of market access for European producers. The automotive industry will witness a profound transformation, with India’s notoriously high import duties on cars being systematically reduced from a peak of 110 percent down to a new low of 10 percent. Similarly, the wine sector is poised for a breakthrough as tariffs, previously as high as 150 percent, will be progressively lowered to a base rate of 20 percent.
Furthermore, the EU confirmed that India will completely eliminate its current 50 percent tariff on a range of processed food products. This elimination will apply to key European exports including pasta, chocolate, and other gourmet food items, granting them unprecedented price competitiveness in the vast Indian consumer market.
This agreement is widely regarded as one of the most significant trade deals negotiated by the EU, marking a decisive step in strengthening economic ties between the world’s largest trading bloc and one of its fastest-growing major economies. The tariff reductions are structured to be implemented progressively, allowing industries in both regions to adapt to the new competitive landscape.