India, EU finalise landmark trade deal, PM Modi says

• The deal covers a quarter of the world's economy and opens India's 1.4 billion-person market to the EU, its biggest trading partner, with implementation expected within a year after legal vetting
• The agreement comes amid global trade realignment as Trump imposed 50% tariffs on Indian goods and an India-U.S. trade deal collapsed in 2025
• The EU has been actively pursuing trade deals, recently signing agreements with Mercosur, Indonesia, Mexico and Switzerland, while India finalized pacts with Britain, New Zealand and Oman

India-EU Trade Deal Summary

Key Development

India and the European Union have finalized a landmark free trade agreement after nearly two decades of on-off negotiations, Prime Minister Narendra Modi announced on January 27, 2026. Modi characterized it as "the mother of all deals," with a joint announcement by Modi and EU Commission President Ursula von der Leyen expected at an India-EU summit in New Delhi.

Key Figures

• Economic scale: Represents 25% of global GDP and one-third of global trade
• Market size: Covers India's 1.4 billion population and the 27-nation EU
• Current trade volume: $136.5 billion between India and EU in fiscal year through March 2025
• Timeline: Legal vetting expected to take 5+ months; implementation anticipated within one year

Strategic Context

The agreement comes amid deteriorating trade relations with the United States under President Donald Trump, who has:

• Imposed 50% tariffs on Indian goods
• Threatened tariffs on European nations
• Contributed to the collapse of an India-U.S. trade deal last year

This deal follows a recent wave of EU agreements with Mercosur, Indonesia, Mexico, and Switzerland, while India has finalized pacts with Britain, New Zealand, and Oman—underscoring global efforts to hedge against U.S. trade unpredictability.

Market Implications

The deal will open India's vast, previously guarded market to free trade with its largest trading partner. This represents significant opportunities for both economies, particularly as Western nations recalibrate alliances amid Trump's aggressive trade policies and geopolitical maneuvering, including his bid to take over Greenland.