Prime Minister Narendra Modi and European Commission President Ursula von der Leyen announced the finalization of a landmark Free Trade Agreement (FTA) in New Delhi. Dubbed the “mother of all deals,” the pact concludes nearly two decades of on-again, off-again negotiations. It is expected to create a massive free-trade zone for 2 billion people, representing roughly 25% of global GDP. The deal serves as a strategic hedge for both powers amid increasing trade tensions and tariff threats from the United States.
Europe and India are making history today.
We have concluded the mother of all deals.
We have created a free trade zone of two billion people, with both sides set to benefit.
This is only the beginning.
We will grow our strategic relationship to be even stronger. pic.twitter.com/C7L1kQQEtr
— Ursula von der Leyen (@vonderleyen) January 27, 2026
The agreement will see the EU eliminate tariffs on 99.5% of Indian exports, providing a massive boost to labor-intensive sectors like textiles, leather, and gems. In return, India has granted unprecedented access to its protected markets; tariffs on European cars will plummet from 110% to just 10% over five years, while duties on wines and spirits will see immediate cuts from 150% to 75%, eventually reaching 20%. The deal also includes a €500 million EU climate fund to support India’s green transition and new “Mode 4” visa rules to ease mobility for Indian IT and engineering professionals.
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Commerce Minister Piyush Goyal confirmed that “legal scrubbing” will be fast-tracked, with the goal of full implementation by the end of 2026. While sensitive sectors like dairy and rice remain protected, the deal marks India’s deepest market-access commitment to date, signaling its shift toward global value-chain integration.
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