New Delhi: India and the European Union are set to announce the conclusion of negotiations on a long-pending free trade agreement and formalise a broad strategic agenda when Prime Minister Narendra Modi hosts European Commission President Ursula von der Leyen and European Council President Antonio Costa at the India-EU summit in New Delhi on January 27. The summit is expected to deliver a package of outcomes spanning trade, defence and security cooperation, mobility, and global geopolitical coordination at a time of heightened uncertainty in the international trading and security environment.
Earlier, after the Republic Day ceremony, Von der Leyen said that a successful India makes the world more stable, prosperous and secure.
“It is the honour of a lifetime to be chief guests at the Republic Day celebrations. A successful India makes the world more stable, prosperous and secure. And we all benefit,” Von der Leyen said on social media.
The formal announcement of the free trade agreement will mark the end of nearly 18 years of negotiations that began in 2007, were suspended in 2013 due to differences in ambition, and were relaunched in June 2022. Commerce Secretary Rajesh Agrawal said on Monday that negotiations had been successfully concluded and the deal finalised. “Negotiations have been successfully concluded. The deal has been finalised,” he said, adding that legal scrubbing of the text is underway. According to him, the agreement is balanced and forward-looking from India’s perspective and is expected to deepen economic integration with the EU while boosting trade and investment flows in both directions.
The agreement is likely to be signed later this year and could come into effect early next year, subject to approval by the European Parliament and clearance by India’s Union Cabinet. Commerce and Industry Minister Piyush Goyal has described the pact as “the mother of all deals” signed by India so far. The FTA covers 24 chapters, including trade in goods, services and investment, and is being negotiated alongside separate agreements on investment protection and geographical indications.
Once implemented, the pact is expected to eliminate or sharply reduce import duties on over 90 per cent of goods traded between India and the 27-nation EU bloc. From India’s side, the agreement is expected to provide duty-free or lower-duty access for labour-intensive sectors such as textiles, leather, apparel, footwear, gems and jewellery, chemicals and electrical machinery. EU tariffs on Indian goods average about 3.8 per cent, but labour-intensive products attract duties of around 10 per cent. Indian negotiators have consistently pushed for zero-duty access in these sectors, a demand that has been met in other recent trade agreements with partners such as the UK, the UAE and Australia.
For the EU, the agreement is expected to include tariff concessions for automobiles and alcoholic beverages, including wines. India currently imposes weighted average duties of about 9.3 per cent on EU goods, with particularly high tariffs on automobiles and parts at 35.5 per cent, plastics at 10.4 per cent, and chemicals and pharmaceuticals at 9.9 per cent. Duties on alcoholic beverages range between 100 and 125 per cent. As in other trade deals, India is expected to offer quota-based and phased tariff reductions in sensitive sectors, while keeping politically sensitive agriculture and dairy issues outside the agreement. The EU has also protected sectors such as beef, sugar and rice from liberalisation.
Beyond goods, the FTA is expected to ease norms in key services sectors including telecommunications, transportation, accounting and auditing. India’s key services exports to the EU include business services, telecommunication and IT services, and transportation, while imports are led by intellectual property services and IT-related services.
The trade deal comes at a time when global trade flows have been disrupted by the imposition of higher tariffs by the United States, including duties of up to 50 per cent faced by Indian exporters. Officials see the India-EU agreement as a means to help Indian exporters diversify markets and reduce dependence on China. Von der Leyen has said the two sides are on the cusp of a “historic trade agreement” that would create a combined market of nearly two billion people and account for almost a quarter of global GDP.
The EU is already India’s largest trading partner in goods. In 2024-25, bilateral goods trade stood at about $136.53 billion, with Indian exports of $75.85 billion and imports of $60.68 billion, giving India a trade surplus of $15.17 billion. Services trade between the two sides was valued at $83.10 billion in 2024. The EU accounts for about 17 per cent of India’s total exports, while India represents around 9 per cent of the bloc’s overseas shipments.
Alongside the FTA, the summit is expected to see the signing of a Security and Defence Partnership, which will deepen cooperation in defence and security and enhance interoperability between the two sides. Von der Leyen said the participation of an EU military contingent in India’s 77th Republic Day parade was a powerful symbol of growing security ties and confirmed that the partnership would be signed at the summit. The agreement is expected to open avenues for Indian companies to participate in the EU’s SAFE programme, a €150 billion financial instrument designed to accelerate defence readiness across member states.
India and the EU are also set to launch negotiations on a Security of Information Agreement to facilitate closer industrial defence cooperation. A memorandum of understanding on the mobility of Indian workers is another expected outcome, providing a framework for mobility initiatives between India and EU member states. Countries such as France, Germany and Italy already have migration and mobility partnerships with India.
The summit will also address broader global issues, including climate change, critical technologies and the state of the rules-based international order. European officials have said discussions will include Russia’s war in Ukraine, which they view as an existential threat to Europe with wider implications for global stability, including in the Indo-Pacific. India and the EU, strategic partners since 2004, have acknowledged differences on some issues but have underscored shared interests in stability, prosperity and security as the foundation for a deeper partnership.