SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure | SDG 17: Partnerships for the Goals
Ministry of Commerce and Industry | Ministry of External Affairs
On January 27, 2026, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen announced the successful conclusion of the India-EU Free Trade Agreement (FTA) negotiations. Termed the “mother of all trade deals,” this landmark accord ends an eighteen-year hiatus and links two economies that together command 25% of global GDP and one-third of world trade. The FTA provides for the elimination or reduction of tariffs on 96.6% of EU goods exports to India, delivering estimated duty savings of €4 billion annually for European exporters. In an unprecedented move, India has slashed car tariffs from 110% to 10% under an annual quota of 250,000 vehicles, while also providing deep concessions on European wines, spirits, and machinery.
Strategic Depth and Security Cooperation Beyond commerce, the summit yielded a comprehensive Security and Defence Strategic Partnership, the first such overarching framework between the two sides.
Maritime and Cyber Security: The partnership focuses on protecting the rules-based international order, with concrete results expected in maritime security in the Indo-Pacific, counter-terrorism, and cyber-resilience.
Green Strategic Partnership: A new roadmap was established for cooperation on climate action, including a €500 million EU support package over the next two years to assist India’s industrial green transition and emissions-cutting efforts.
Digital Public Infrastructure (DPI): Both sides committed to the global adoption of DPI and intensifying cooperation under the India-EU Trade and Technology Council (TTC) for secure semiconductor supply chains.
Legal Frameworks for Investment and Culture The deal is accompanied by a standalone Investment Protection Agreement (IPA) and a separate agreement on Geographical Indications (GIs). The IPA establishes a modern, independent Investment Court System (ICS) to provide a predictable legal environment for foreign capital, protecting against expropriation without compensation. The GI agreement ensures legal protection for iconic products such as Darjeeling Tea and Champagne, preventing unfair imitation and preserving the cultural heritage of both sides.
What is the “Investment Court System” (ICS) in the India-EU IPA? The ICS is a modern, independent dispute resolution mechanism established under the standalone Investment Protection Agreement. Unlike traditional investor-state dispute settlement (ISDS) models, it features a permanent tribunal of judges and an appeal mechanism, ensuring high levels of transparency and accountability while balancing the protection of cross-border capital with the sovereign right of governments to regulate in the public interest.
Policy Relevance
The conclusion of the India-EU FTA represents a strategic pivot toward market diversification and industrial self-reliance at a time of global trade volatility.
Export Competitiveness: Over 99% of Indian exports gain preferential entry into the EU, projected to boost total exports by USD 75 billion. Labor-intensive sectors like textiles, gems, jewelry, and leather—which currently face duties around 10%—will gain immense growth potential through zero-duty access.
Manufacturing Hub Positioning: By integrating into European supply chains and securing a Digital Trade Chapter for secure online commerce, India solidifies its position as a resilient alternative global manufacturing hub.
Regulatory Alignment: The forward-looking provisions regarding the Carbon Border Adjustment Mechanism (CBAM) provide a critical window for Indian heavy industries to align with EU environmental standards through dialogue and technical support.
Professional Mobility: A future-ready mobility framework expands global opportunities for skilled and semi-skilled Indian professionals and ICT specialists, meeting EU labor needs while leveraging India’s workforce surplus.
Relevant Question for Policy Stakeholders: How can the Ministry of Commerce align domestic regulatory standards with the FTA’s “Digital Trade Chapter” to ensure Indian startups can compete fairly in the EU’s secure and predictable online commerce ecosystem?
Follow the full news here: Outcome of India-EU Visit | Conclusion of India-EU FTA | EU-India Trade Agreement Details