EU and India Seal Landmark Free Trade Deal Covering 2 Billion People

The European Union and India have successfully wrapped up negotiations on a far-reaching free trade agreement, described as historic, highly ambitious and commercially significant. It is the largest trade deal ever concluded between the two partners and comes at a moment marked by growing geopolitical uncertainty and economic pressure worldwide. The agreement aims to deepen both economic and political relations between the world’s second- and fourth-largest economies, reaffirming their shared support for open markets and a rules-based global trade system.

European Commission President Ursula von der Leyen described the deal as a landmark step, saying it creates a free trade area covering around 2 billion people and delivers tangible benefits on both sides. She stressed that the agreement sends a clear international signal that cooperation based on rules still works, adding that this deal is only the starting point for a broader and stronger partnership between the EU and India.

Trade between the EU and India already exceeds €180 billion annually (around BGN 352 billion), sustaining close to 800,000 jobs within the European Union. Under the new agreement, EU exports of goods to India are expected to double by 2032. This will be achieved mainly through the removal or reduction of tariffs on 96.6% of EU goods entering the Indian market. In total, European companies are projected to save about €4 billion per year in duties (approximately BGN 7.8 billion).

This deal represents the most extensive market opening India has ever offered to any trading partner. It gives European industrial sectors and the agri-food industry a major competitive edge by granting preferential access to the world’s most populous country, with around 1.45 billion people, and one of the fastest-growing major economies, with annual GDP estimated at €3.4 trillion (roughly BGN 6.65 trillion).

A major focus of the agreement is support for businesses of all sizes. India has agreed to tariff cuts for the EU that go beyond those granted to any other partner. Duties on cars, for instance, will be phased down from 110% to 10%, while tariffs on car parts will be fully abolished within five to ten years. Significant reductions are also foreseen for machinery, chemicals and pharmaceuticals, where current tariffs of up to 44%, 22% and 11% respectively will be largely removed. To help smaller firms benefit from the agreement, the EU and India will establish dedicated contact points to provide guidance and address practical problems related to its implementation. SMEs are expected to gain from lower tariffs, fewer regulatory hurdles and a more predictable business environment.

Agricultural trade is another key pillar of the agreement. It tackles high duties on EU agri-food exports, which currently average over 36%, opening substantial opportunities for European producers. Wine tariffs will be cut from 150% to 75% when the agreement takes effect and gradually reduced to 20%. Duties on olive oil will fall from 45% to zero within five years, while tariffs of up to 50% on processed products such as bread and confectionery will be eliminated. At the same time, sensitive EU agricultural sectors are safeguarded, with products like beef, poultry, rice and sugar excluded from liberalisation. All imports from India will continue to meet the EU’s strict food safety and health standards.

The agreement also offers European firms enhanced access to India’s services market, including strategic areas such as financial services and maritime transport. India has made its most far-reaching commitments ever in financial services within a trade agreement, exceeding the concessions offered to other partners. In parallel, the deal provides strong protection for intellectual property rights, covering copyright, trademarks, designs, trade secrets and plant varieties. By aligning Indian and European IP frameworks and building on international treaties, the agreement is designed to make cross-border trade and investment easier for companies that depend on innovation and intellectual property.

Sustainability is embedded in the agreement through a dedicated chapter on trade and sustainable development. This section strengthens environmental and climate commitments, reinforces labour rights, promotes women’s empowerment and establishes mechanisms for dialogue and cooperation on climate- and environment-related trade issues. Alongside the trade deal, the EU and India plan to sign a Memorandum of Understanding to set up a joint platform for climate action, scheduled to launch in the first half of 2026. Subject to EU financial rules, up to €500 million in EU support (around BGN 978 million) is envisaged over the next two years to assist India in cutting greenhouse gas emissions and advancing its long-term sustainable industrial transformation.

The agreed legal texts are due to be published soon, after which they will be finalised and translated into all official EU languages. The European Commission will then submit the agreement to the EU Council for approval. Once endorsed by EU governments, it can be formally signed by both sides. Final entry into force will require the consent of the European Parliament, a concluding decision by the Council, and ratification by India.