India and the European Union on Tuesday, January 27, concluded a free trade agreement after nearly two decades of negotiations, a deal expected to affect up to two billion people and cover almost all goods traded between the two sides.

The agreement will lower or eliminate tariffs on the majority of products exchanged between India and the EU’s 27 member states, including textiles, medicines, automobiles and wine. It is expected to take effect later this year after legal review and ratification by the European Parliament.

India will reduce or remove tariffs on 96.6% of EU exports, while the EU will phase in tariff cuts covering nearly 99% of Indian exports by trade value. The European Commission said India’s tariffs on EU-made cars will fall from 110% to as low as 10%, while duties on premium European wine will drop from 150% to 20%. Certain sensitive products, including dairy in India and sugar and meat in the EU, are excluded.

The deal is projected to cut up to €4 billion ($4.7 billion) in annual tariffs, deepen supply-chain integration and create jobs in both economies. Trade between India and the EU totaled $136.5 billion in 2024–2025, with officials aiming to raise it to $200 billion by 2030.

India and the EU also agreed on frameworks for defense and security cooperation and for easing mobility for skilled workers and students, signaling a broader strategic partnership amid rising global trade tensions.