EU-India Trade Deal Cuts Tariffs on Key Goods

The EU-India Trade Deal concluded on January 26–27, 2026, eliminates or reduces tariffs across most industrial and food sectors, establishes a capped motor-vehicle quota, and includes climate and intellectual-property provisions. The agreement sets a ratification timetable aiming for entry into force in early 2027.

Tariff Reductions and Sector Impact

The European Commission said the pact removes or lowers tariffs on about 96.6% of EU goods exports to India. Machinery and electrical equipment, which accounted for €16.3 billion in 2024 exports and faced duties up to 44%, will see tariffs drop to zero for nearly all products. Similar zero-duty treatment applies to aircraft and spacecraft (€6.4 billion), chemicals (€3.2 billion), and pharmaceuticals (€1.1 billion). Optical and medical equipment (€3.4 billion) will have 90% of lines duty-free.

The deal also covers plastics (€2.2 billion), iron and steel (€1.5 billion), and pearls, precious stones, and metals (€2.1 billion). For the latter, zero duties apply to about 20% of items, with reductions on another 36%. Motor-vehicle tariffs, previously as high as 110%, are replaced by a 10% duty under an annual quota of 250,000 vehicles.

In agriculture and food, the agreement applies tiered tariff cuts. Wine duties fall from 150% to 20% for premium ranges and to 30% for mid ranges. Spirits and some distilled products see reductions from up to 150% to 40%, while beer tariffs drop from 110% to 50%. Olive and other vegetable oils, fruit juices, and many processed foods shift to zero tariffs. Kiwis and pears move from 33% to a 10% in-quota rate, and sheep meat tariffs are eliminated. Certain sausages and meat preparations receive smaller reductions.

India gains duty-free access for textiles, leather, and marine products. Agriculture and dairy remain sensitive sectors with calibrated commitments.

Ratification Process and Economic Outlook

Negotiations concluded in late January 2026. The European Commission said both sides will finalize the text over the next two weeks, followed by a five- to six-month legal review. The European Parliament will then consider ratification. The agreement is not classified as mixed competence, so individual EU member states do not need to approve it. Separate talks on geographical indications will continue.

The commission projects up to €4 billion in annual duty savings for European exporters and expects EU goods exports to India to double by 2032. Current bilateral goods trade is about $136 billion, with EU exports supporting roughly 800,000 European jobs. The deal includes €500 million in climate support over two years and chapters to strengthen protection for EU trademarks, designs, copyrights, and trade secrets. It also establishes a predictable digital-trade framework, secures services access for financial and maritime providers, and offers small and medium enterprises dedicated contact points to facilitate trade.

Negotiations began around 2007, resumed momentum in 2024, and concluded after renewed efforts in January 2026. Officials noted the timing reflected a desire to hedge against U.S. tariff uncertainty. Ursula von der Leyen, president of the European Commission, said, "We have created a free trade zone of two billion people."