97% of goods tariffs will be reduced or even eliminated! India and the European Union announce the conclusion of the “largest-ever free trade agreement.”

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2026-01-30 17:51

The automobile tariff rate has been reduced from 110% to a minimum of 10%.

Wine tariffs have been reduced from 150% to as low as 20%.

According to the latest information from Hui Jietong: On January 27, local time, after nearly 20 years of lengthy negotiations, India and the European Union finally finalized what is hailed as the “largest free trade agreement in history.” At a time when global geopolitical and trade tensions are escalating, the two sides have jointly established a free trade zone covering a population of 2 billion.

Speaking at the 16th India-EU Summit held in New Delhi on Tuesday (January 27), Indian Prime Minister Modi said: “Today, India and Europe have taken an important step forward... This agreement will boost trade, investment, and innovation, while strengthening our strategic relationship. It reflects our shared commitment to shaping a stable, prosperous, and future-oriented economic partnership.”

India and the European Union described this free trade agreement as the “mother of all agreements.” Modi said the agreement covers roughly 25% of the global economy and one-third of global trade, and will bring numerous opportunities to people in both regions.

In a statement, European Commission President von der Leyen said: “Today, the EU and India are making history together, deepening the partnership between the world’s two largest democracies. We have established a free-trade area with a population of 2 billion, from which both sides will benefit.”

She pointed out that this agreement also demonstrates to the world that rule-based cooperation can still yield abundant results. “More importantly, this is just the beginning. Building on this success, we will further strengthen our relationship.”

This is the latest example of middle-power countries around the world seeking to expand their alliance networks in order to counter economic challenges such as the U.S. tariff war and China’s export controls.

The Indo-European negotiations have spanned 19 years, with acceleration in progress over the past six months.

According to the agreement, India will ease market access for key European products. Tariffs on nearly 97% of goods from the EU will be reduced or even eliminated. Among these, automobile tariffs will gradually decrease from the current high of 110% to as low as 10%, and wine tariffs will gradually drop from 150% to as low as 20%. Currently, the 50% tariff on processed foods will also be abolished.

It is projected that by 2032, the EU’s exports to India will double, allowing EU companies to save up to €4 billion annually in tariff costs and gaining priority access to India’s financial services and maritime transport markets.

Meanwhile, the European Union will gradually eliminate or reduce tariffs on 99.5% of Indian goods exported to Europe over a seven-year period. Modi said that multiple Indian industries—including textiles, jewelry, leather goods, and services—will benefit from this move.

Trade negotiations between India and the European Union began as early as 2007, but were subsequently stalled for nine years due to disagreements over automobiles, agriculture, and agricultural products—only resuming in 2022. Driven by shared concerns about U.S. tariff policies, as well as China’s monopolization of global manufacturing and its restrictions on key exports, the negotiations have accelerated over the past six months.

German Finance Minister Scholz welcomed the agreement between the EU and India, describing it as opening a new chapter in European trade policy. He said, “In times of uncertainty, we are consciously focusing on openness, reliability, and strong partnerships.”

Indian officials revealed that the legal review process for the agreement will take about five to six months to complete. The agreement also requires approval from both the European Parliament and the Indian Federal Cabinet. Afterward, the two sides will sign the formal document. Indian Trade Minister Goyal said, India hopes the agreement will take effect within this year.

This is the fourth major trade agreement India has reached since the U.S. imposed hefty tariffs on New Delhi last year. Previously, India had reached agreements with the United Kingdom, Oman, and New Zealand. Meanwhile, the European Union has also been signing trade agreements one after another with Indonesia, Mexico, Switzerland, and Mercosur—a regional trade bloc comprising South American countries.

Experts believe that while the agreement between India and the EU represents a significant milestone, it cannot replace the necessity of reaching an agreement between India and the United States. The U.S. is India’s largest export market. Last year, India and the U.S. engaged in active consultations on trade issues, but the negotiations ultimately broke down.

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