India and the European Union stand on the cusp of a landmark free trade agreement, often dubbed the 'Mother of All Deals' by key figures such as Commerce Minister Piyush Goyal and European Commission President Ursula von der Leyen.

This pact, uniting markets of nearly two billion people and representing around 25 per cent of global GDP, promises to reshape trade dynamics amid escalating US tariffs under President Trump.

Negotiations, first launched in 2007 and relaunched in June 2022 after a nine-year hiatus, have accelerated dramatically over the past year.

An official announcement on the conclusion of talks is anticipated at the India-EU Summit in New Delhi on 27 January 2026, coinciding with Republic Day festivities where von der Leyen serves as chief guest alongside leaders like European Council President Antonio Costa. Prime Minister Narendra Modi is set to host the high-level gathering, potentially sealing a comprehensive strategic vision for bilateral ties through 2030.

The EU remains India's largest trading partner for goods, with bilateral trade hitting approximately $136 billion in 2024-25. The FTA aims to slash tariffs on key EU exports like cars, wines, and spirits, while introducing tariff-rate quotas for automobiles and boosting Indian sectors such as textiles and jewellery. 

Restoration of the Generalised System of Preferences (GSP) will further ease duties on developing-country imports to the EU, enhancing India's competitive edge.

Contentious issues like the EU's Carbon Border Adjustment Mechanism (CBAM) on carbon-intensive goods such as steel and cement have seen narrowed differences, with ongoing tweaks to steel provisions.

Beyond trade, the summit will launch negotiations for a Security of Information Agreement (SOIA) to bolster defence-industrial cooperation and an MoU to facilitate Indian worker mobility to Europe. These elements underscore a pivot towards diversified supply chains and strategic partnerships.

While the announcement marks a pivotal milestone, the deal requires legal vetting, EU Parliament ratification—which could take at least a year—and Indian Cabinet clearance before signing and implementation. Goyal has emphasised the deal's scale, surpassing his prior seven FTAs with developed economies, positioning it as a bulwark against global trade disruptions. Sources indicate final hurdles are minimal, with momentum driven by mutual geopolitical imperatives.

For India, the pact aligns with 'Make in India' by attracting EU investment in manufacturing and technology, while fortifying supply chains resilient to US protectionism.

The EU views it as a gateway to high-growth Asian markets, countering uncertainties from Trump's tariff policies. Trade Secretary Rajesh Agrawal confirmed in mid-January that closure by 26 January was feasible, validating the accelerated timeline.

This 'mother of all deals' not only promises economic upliftment—projected to enhance exports and investments—but also deepens India-EU strategic alignment on security, energy, and sustainability. As delegations arrive in Delhi, including EU foreign policy chief Kaja Kallas and Trade Commissioner Maros Sefcovic, expectations run high for a transformative pact. The outcome could redefine global trade architecture for years ahead.

Agencies