Department of Commerce (Trade Division)
India-EU Trade Pact 2026
Historic Zero-Duty Deal
India-EU FTA Concluded: Duties Slashed on 99% Goods & Car Tariffs Cut to 40% (Official)
The 18-year wait is over. India and EU have sealed the deal to remove duties on 99% of Indian exports (Textiles, Gems, Leather). In return, India cuts import tax on European cars from 100% to 40%. Services sector gets easier visa norms for professionals.
What Changed: The “Mother of All Deals”
New Delhi and Brussels have officially concluded negotiations for the India-EU Free Trade Agreement (FTA) today, January 27, 2026. This historic pact, finalized after nearly two decades of talks, promises to reshape the economic landscape by eliminating tariffs on the vast majority of goods traded between the two economies. It marks a strategic shift for India, positioning itself as a key manufacturing alternative to China.
✅ Official Announcement
Authority: Ministry of Commerce & Industry
Event: Conclusion of India-EU FTA Negotiations
Date: January 27, 2026
Key Outcome: Zero duty on 99% tariff lines
The New Protocol: Duty Cuts & Market Access
The agreement is “balanced and forward-looking,” addressing India’s export strengths while granting the EU access to India’s growing aspirational class.
✔ Big Wins for India (Zero Duty)
- Textiles & Apparel: Immediate 0% duty (down from ~9.6%), boosting competitiveness against Bangladesh.
- Gems & Jewellery: Duty-free access for cut and polished diamonds.
- Marine & Leather: High tariffs of 17-26% removed completely.
- Services: “Professional Mobility” clause allows easier work visas for Indian IT, Nursing, and Teaching professionals.
✖ EU Gains & Protected Sectors
- European Cars: Import duty slashed from 100-110% to 40% for luxury vehicles.
- Protection: India has successfully excluded Dairy and Sensitive Agricultural products to protect farmers.
Timeline & Implementation Path
| Stage | Timeline | Status |
|---|---|---|
| Negotiation Conclusion | Jan 27, 2026 | Completed |
| Legal Scrubbing | Mid-2026 | Next Step |
| Official Signing | Late 2026 | Pending |
| Implementation (In Force) | Early 2027 | Expected |
Official Language Decoding
“Legal Scrubbing”: This refers to the process where lawyers from both sides review the agreed text to ensure it is legally watertight before the final signature. No new terms can be added during this phase.
“Zero-Duty Access”: This means Indian exporters will pay ₹0 in customs tax when selling to Europe, making their products significantly cheaper for European buyers.
Frequently Asked Questions
Will European luxury cars become cheaper in India?
Yes. The import duty on European cars will drop from the current 100% to 40% once the deal is implemented, significantly reducing the price of luxury vehicles.
Will this affect Indian farmers or dairy?
No. The government has kept sensitive sectors like Dairy and Agriculture out of the agreement. European milk and cheese will not get duty-free access, protecting Indian farmers.
Does this mean open immigration to Europe?
No. The deal facilitates “Professional Mobility,” meaning it will be easier for skilled professionals (like engineers and nurses) to get temporary work visas, but it is not an open immigration policy.