India and the European Union are set to announce the conclusion of negotiations for a long-awaited free trade agreement on January 27, marking a major milestone in bilateral economic relations after nearly 18 years of talks. The announcement will be made during the India-EU Summit in New Delhi, coinciding with high-level discussions between Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President Antonio Costa.

Described by Commerce and Industry Minister Piyush Goyal as the “mother of all deals,” the pact is poised to become India’s biggest trade agreement, given the EU’s status as a 27-nation bloc of developed economies. Although negotiations are concluding this week, the agreement will be formally signed after legal vetting and will require approval from the European Parliament, while in India it needs Union Cabinet clearance.

The agreement aims to reduce or eliminate import duties on over 90 per cent of goods traded between the two sides. Immediate duty elimination is expected for several labour-intensive Indian sectors such as textiles, footwear and leather, while phased reductions will apply to select products over five to ten years. Sensitive areas, particularly agriculture and dairy, have been excluded to protect farmers on both sides.

The pact gains significance amid disruptions in global trade due to high US tariffs, which have impacted Indian exports. The EU currently accounts for around 17 per cent of India’s exports and is its largest trading partner in goods, with bilateral trade touching USD 136.53 billion in 2024-25. Services trade stood at USD 83.10 billion.

India is seeking zero-duty access for textiles, handlooms, leather goods and processed foods, while the EU wants greater access for automobiles, wines and high-tech products.