New Delhi, Jan. 24, 2026 – India and the European Union are on the verge of finalizing a landmark free trade agreement, perhaps the “mother of all deals,” as EU chiefs prepare to meet with Prime Minister Narendra Modi next week. The prospective pact aims to bolster economic ties amid growing challenges from China and the united States.
“We are on the cusp of a historic trade agreement,” European Commission President Ursula von der Leyen declared this week. Von der Leyen and European Council President Antonio Costa will attend Republic Day celebrations on Monday, followed by an EU-India summit on Tuesday, where they hope to formalize the accord.
the agreement, decades in the making, would represent a significant victory for both Brussels and New Delhi as they navigate a landscape marked by US tariffs and Chinese export controls.
‘Untapped Potential’
What is driving the renewed momentum behind the EU-India trade deal? Russia’s invasion of ukraine and shifting trade dynamics spurred by US tariffs have accelerated discussions, according to Praveen Donthi of the International Crisis Group. “The EU eyes the Indian market and aims to steer a rising power like India away from Russia, while India seeks to diversify its partnerships, doubling down on its strategy of multi-alignment at a time when its relations with the US have taken a downward turn,” he said.
The 27-member EU is also seeking to expand exports of spirits and wines and strengthen intellectual property protections. India, the world’s fastest-growing major economy,is prioritizing greater market access for textiles and pharmaceuticals.
Defense Pact
While EU officials remain tight-lipped about the specifics of the deal as negotiations continue, agriculture-a sensitive issue for both sides-is expected to be a limited component, with New Delhi aiming to safeguard its dairy and grain industries.
Key sticking points include the potential impact of the EU’s carbon border tax on steel exports and differing safety and quality standards in the pharmaceutical and automotive sectors, sources familiar with the discussions revealed. However, EU officials expressed confidence that an agreement could be reached in time for the summit.
Alongside the trade pact, discussions are underway regarding a mobility accord to facilitate the movement of seasonal workers, students, researchers, and skilled professionals, as well as a security and defense partnership.The latter would focus on enhanced cooperation in areas such as maritime security, cybersecurity, and counter-terrorism, and could pave the way for joint military equipment production, according to EU officials.
new Delhi, traditionally reliant on Moscow for military hardware, has been actively diversifying its defense imports and promoting its own domestic manufacturing base in recent years. Europe is pursuing a similar strategy to reduce its dependence on the United States.
“We’re ready to open a new chapter in EU-India relationships, and really to unlock what we think is the transformative potential of this partnership,” another EU official stated.
