India-EU Trade Deal Set for January 27 Signing in New Delhi: Report

India is set to formalize a landmark trade agreement with the European Union on January 27, 2026, marking the bloc’s largest-ever trade deal. While agriculture remains excluded, the pact signals deeper India-EU economic engagement in other key sectors.

The European Union is preparing to formalize its most expansive trade agreement to date with India on January 27, 2026. Senior EU leadership is expected to travel to New Delhi to finalize the pact, according to multiple media reports. An Euractiv report, published on January 14, 2026, suggests that agriculture has been deliberately excluded from the agreement, reflecting Brussels’ strategic urgency to shape EU-India trade engagement.

European Commission President Ursula von der Leyen has reportedly briefed Members of the European Parliament in a closed-door session, confirming that the agreement would be signed within the month and would not extend to agricultural sectors.

Von der Leyen, alongside European Council President António Costa, is expected to sign the agreement with Indian Prime Minister Narendra Modi during the New Delhi visit between January 25 and 27, 2026.

Strategic significance despite agricultural exclusion

Ursula von der Leyen has described the deal as a major signal of the EU’s trade priorities, even with the carve-out. She reiterated that agriculture had consistently been outside the scope of the negotiations.

Notwithstanding this exclusion, the agreement would still rank as the EU’s largest trade deal, offering enhanced access to a market that accounts for roughly one-quarter of the global population.

Agriculture remains one of the most sensitive policy areas in India, employing close to 44 percent of the workforce. Consequently, broader EU access to Indian food markets has encountered strong domestic resistance. The European Commission has already confirmed that several products, including dairy and sugar, fall outside the agreement’s scope.

India-EU FTA: Context and broader negotiations

The India-EU FTA, if finalized, would become India’s 19th trade agreement and one of its most consequential, given the EU’s position as India’s largest trading partner for goods.

At a time of global trade disruption, the FTA is expected to drastically expand Indian exports to the 27-member bloc and deepen economic ties. With elevated US tariffs and rising geopolitical tensions reshaping supply chains, the agreement could help Indian exporters diversify markets and reduce external vulnerabilities.

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Why the India-EU FTA matters

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The push to finalize the FTA has gained momentum amid rising protectionism, including US tariffs that have reached levels of up to 50 percent in certain sectors. For India, the agreement offers an opportunity to reduce dependence on other economies such as China, strengthen export competitiveness in Europe, and mitigate the impact of restrictive trade policies elsewhere.

FTAs typically lower or eliminate customs duties, improve regulatory alignment, and facilitate market access. The India-EU free trade agreement is expected to benefit sectors such as technology, pharmaceuticals, automobiles, textiles, steel, petroleum products, and electrical machinery. Labor-intensive industries, including garments, leather, and pharmaceuticals, could see improved competitiveness in EU markets. India’s services exports, particularly in telecommunications, transport, and business services, are also expected to expand.

From the EU’s perspective, think tank agency Global Trade Research Initiative (GTRI) notes that European exporters could gain from increased access for aircraft and components, electrical machinery, chemicals, diamonds, and high-value services such as intellectual property, IT, telecommunications, and professional services.

Commercial ties at a glance

India’s bilateral merchandise trade with the EU reached US$136.53 billion in FY 2024-25, comprising US$75.85 billion in exports and US$60.68 billion in imports. This makes the EU India’s largest merchandise trading partner.

Source: Department of Commerce, Ministry of Commerce and Industry, GoI

The EU accounts for around 17 percent of India’s total exports, while India represents approximately 9 percent of the bloc’s external shipments. In FY 2023-24, India exported US$75.92 billion in merchandise goods and US$30 billion in services to the EU. EU exports to India during the same period included US$61.48 billion in goods and US$23 billion in services. Spain, Germany, Belgium, Poland, and the Netherlands rank among the top EU destinations for Indian exports.

India-EU trade basket: Key products and tariff challenges

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India’s primary exports to the EU include petroleum products, electronics (notably smartphones), textiles, machinery, organic chemicals, iron and steel, gems and jewelry, pharmaceuticals, and automotive components.

However, Indian textile exports currently face EU tariffs of 12-16 percent, placing them at a disadvantage compared to competitors such as Bangladesh and Vietnam, which benefit from preferential access under EU trade arrangements.

India’s main imports from the EU include machinery, aircraft and parts, electronics, medical devices, scientific instruments, rough diamonds, chemicals, plastics, and automobiles. In services, India exports business, IT, telecommunications, and transport services, while importing intellectual property and IT-related services from the EU.

Alcohol trade forms a notable component of bilateral commerce. In 2023-24, India exported wines worth US$1.5 million and spirits worth US$64.9 million to the EU, while importing wines valued at US$412.4 million and spirits worth US$22.3 million.

Investment flows

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On the investment front, cumulative foreign direct investment (FDI) from the EU into India stood at US$117.4 billion between April 2000 and September 2024, accounting for 16.6 percent of total FDI inflows.

Around 6,000 European companies currently operate in India. During the same period, Indian outward FDI to the EU amounted to approximately US$40.04 billion, with the Netherlands, Germany, France, Spain, and Belgium among the largest EU investors in India.

ALSO READ: How India’s FDI Rules, FTAs, and Key Sectors Shape Investment in 2026

Background: A protracted negotiation process

Negotiations for an India-EU FTA began in 2007 and continued through multiple rounds until 2013, before stalling over disagreements related to automobile tariffs, wine and spirits, data protection for Indian IT firms, intellectual property rights, labor standards, and government procurement.

While attempts to revive talks between 2016 and 2020 yielded limited progress, momentum returned after 2020. In June 2022, India and the EU formally relaunched negotiations covering a free trade agreement, an investment protection agreement, and a geographical indications agreement, setting the stage for the current push towards conclusion by January 2026.

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