India and EU Set for the ‘Mother of All Deals’ as Trump’s Tariff Uncertainty Looms

New Delhi / Brussels — January 24, 2026 — After nearly two decades of negotiations, India and the European Union (EU) are poised to conclude what may become the most transformative trade agreement of the 21st century — a pact that has been widely described by leaders on both sides as the “mother of all deals.” The landmark Free Trade Agreement (FTA), expected to be announced at the India‑EU Summit in New Delhi later this month, could reshape global commerce at a time when trade relations with the United States remain volatile under President Donald Trump’s tariff policies. �

The Times of India +1

Historic Deal Nears Finalisation After Years of Talks

Talks on an India‑EU FTA began as far back as 2007 and have crossed numerous political and economic hurdles since then. Multiple chapters of the comprehensive agreement — addressing goods, services, investment, intellectual property, and regulatory cooperation — are now in their final phases of negotiation. EU officials and Indian leaders alike have signalled confidence that an announcement is imminent during the summit scheduled for January 25–28, 2026, when EU leadership will be in India to attend Republic Day celebrations and bilateral meetings. �

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European Commission President Ursula von der Leyen has publicly characterised the deal as “historic,” noting that it would integrate two of the world’s largest markets — nearly 2 billion people and about one‑quarter of global GDP — into a more seamless economic partnership. �

Reuters

Defining the ‘Mother of All Deals’

The scale and ambition of the proposed India‑EU trade accord are unrivalled in India’s trade history. Commerce Minister Piyush Goyal — who previously spearheaded negotiations with other major economic blocs — has referred to this pact as the “mother of all deals,” reflecting both its size and its strategic implications. �

The Times of India

Once implemented, the FTA is expected to significantly lower tariffs on a wide array of products and services, from textiles and jewellery to machinery and chemicals — sectors where India has seen export growth slow amid rising international protectionism. European exporters, in turn, may see lower duties on key industrial goods such as automobiles, wine and spirits, and specialised equipment. �

Business Today

For India, restoring and expanding preferential access to the EU market is a priority. A significant development this year was the EU’s suspension of Generalised Scheme of Preferences (GSP) benefits for Indian exports, which had previously helped Indian products enter Europe at lower tariff rates. That suspension has increased costs for exporters and eroded competitiveness in key labour‑intensive industries such as garments and pharmaceuticals — a gap the FTA is designed to close. �

The Times of India +1

Strategic Timing: Trump’s Tariff Uncertainty

The push to finalise the India‑EU pact has taken on added urgency against the backdrop of trade uncertainty sparked by the United States. President Trump’s rhetoric and actions on tariffs — including threats of steep duties on imported goods — have sent shockwaves through global markets and shaken confidence among exporters worldwide. While some US tariffs on Indian imports remain in force, businesses are increasingly looking for stable, predictable trade relationships elsewhere. �

AOL

This climate of unpredictability has inadvertently strengthened the case for a deeper partnership between India and the EU. European and Indian policymakers have both stressed the need to diversify trade dependencies, reduce reliance on any single market, and build resilient supply chains that can withstand geopolitical shifts. Amid these pressures, the India‑EU agreement offers a rules‑based trading framework anchored in mutual market access and regulatory cooperation. �

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Benefits on Both Sides of the Deal

For India:

Expanded Market Access: The removal or reduction of tariffs on goods worth billions of dollars could significantly boost Indian exports, particularly in textiles, jewellery, pharmaceuticals and steel. �

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Services Growth: The pact is expected to facilitate easier market access for India’s booming services sector, including IT and professional services — areas where Indian expertise is global in reach. �

Business Today

Economic Diversification: By strengthening trade with Europe, India can lessen its exposure to unpredictable tariff regimes in other markets. �

Moneycontrol

For the EU:

Diversified Supply Chains: European companies stand to benefit from stronger economic integration with a major emerging market, reducing reliance on China and other concentrated supply hubs. �

The Economic Times

Market Growth: EU exporters in automobiles, machinery and aviation sectors could access one of the fastest‑growing consumer markets in the world. �

Business Today

Geopolitical Leverage: A stronger economic partnership with India aligns with the EU’s broader strategy of forging resilient alliances amid rising global protectionism. �

The Times of India

Persistent Challenges and Red Lines

Despite the optimism, significant roadblocks remain. India has signalled that sensitive sectors such as agriculture and dairy will be shielded from sweeping tariff cuts. Automobiles and alcohol also present contentious points in negotiations, with phased tariff reductions under discussion. �

AOL

Non‑tariff barriers, including stringent EU regulatory standards, carbon border adjustments and data protection rules, pose additional challenges that could dilute some benefits unless resolved in the final text of the agreement. �

Moneycontrol

European Parliament approval is another potential bottleneck. As with many comprehensive trade agreements, ratification may take up to a year, especially given concerns among some EU lawmakers about environmental and labour standards. �

Reuters

A Turning Point in Global Trade

The emergence of the India‑EU FTA at this particular moment highlights a broader shift in global economic dynamics. At a time when protectionist sentiment has risen in key markets — underscored by unpredictable tariff threats from the United States — India and the EU are signalling a renewed commitment to open trade, cooperation and economic integration.

If successfully concluded, the deal could not only bolster bilateral commerce but also serve as a beacon for other nations seeking alternatives to volatile trade environments. It would stand as a testament to the enduring value of rules‑based trading systems in an increasingly fragmented world economy. �