EU and India agree on massive free trade area

A Clear Path at Last! EU and India Agree on Gigantic Free Trade Zone

2026-01-27 Source: dpa 2 min Reading Time

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The EU and India have agreed on a huge free trade area. This provides for the dismantling of trade barriers and tariffs in order to boost the exchange of goods and services ...

After almost twenty years, the EU and India have agreed on a free trade area, as is now being reported. This will bring economic opportunities for both sides ...(Image: Rhandi Guacal) — After almost twenty years, the EU and India have agreed on a free trade area, as is now being reported. This will bring economic opportunities for both sides ...
(Image: Rhandi Guacal)

The agreement announced at a summit in New Delhi, which the EU and India have now reached, aims to boost mutual trade for the benefit of all. This should also promote growth and jobs. At the same time, undesirable dependencies on other countries would be reduced. Against the backdrop of US President Donald Trump's aggressive customs and trade policy and China's increasing striving for power, the establishment of the new free trade zone is also seen as a geopolitically significant step. It also sends a signal to the world that rules-based cooperation continues to deliver excellent results. An EU official in Brussels said that trade with India currently only accounts for around 2.5 percent of total EU trade in goods—compared to almost 15 percent for China. Despite comparatively high tariffs on the Indian side, trade between the EU and India has already grown by almost 90 percent in the last ten years.

Around Four And A Half Billion US Dollars Less Customs Duties Per Year

India's most important exports to EU countries include machinery, household appliances, chemicals, metal plates, mineral products and textiles. Hildegard Müller from the German Association of the Automotive Industry said that even if not all obstacles were removed, the successful conclusion of the negotiations was an important step for Germany as an export country. This would provide urgently needed improved market access in an increasingly protectionist global environment. Regarding the potential of trade relations between the EU and India, the EU stated that the agreement is expected to lead to a doubling of EU exports to India by 2032 by eliminating or reducing tariffs to 96.6 percent of the value of EU goods exports to India. Overall, the tariff reductions would enable savings of around four and a half billion US dollars per year in duties on European products. According to EU figures, more than 6,000 European companies are already represented in India.

Second Negotiation Success for the EU in A Short Space of Time

With more than 1.45 billion inhabitants, India is the most populous country in the world, ahead of China, and negotiations on the agreement began back in 2007. The agreement is now to be signed before the end of this year if possible and then enter into force quickly. The agreement with India marks the EU's second major success in trade policy this year. Just over a week ago, von der Leyen and EU Council President António Costa signed the free trade agreement with the Mercosur states of Brazil, Argentina, Uruguay and Paraguay in South America, which had been under negotiation for around a quarter of a century. The agreement now planned with India is less comprehensive because, for example, products such as beef, poultry, rice and sugar are excluded from liberalization, but in view of the size of the Indian market, it will nevertheless be one of the most important that have been agreed to date.

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