India and the European Union (EU) have finalised the terms of a comprehensive free trade agreement (FTA), according to Commerce Secretary Rajesh Agrawal.
Agrawal claimed that the "balanced and forward-looking" trade deal, which has taken more than two decades to come to fruition, will be announced formally at the 16th India-EU Summit on Tuesday.
The deal is expected to boost trade and investments in both countries, and will come into force "sometime next year", much to the chagrin of the US.
"Legal scrubbing of the text will take 5-6 months; formal signing will be done post that,” Agrawal added.
India’s bilateral trade in goods with the EU stood at $136.53 billion in 2024-25, making the 27-nation bloc New Delhi's largest goods trading partner. India had also recorded a trade surplus of $15.17 billion with the EU in 2024-25.
This could grow to over $50 billion by FY 31, and increase the bloc's share in India's exports from 17.3 per cent in FY 25 to 22-23 per cent over the same period, as per a Moneycontrol report, citing analysts.
The agreement is also expected to provide preferential access for a wide range of Indian exports to the EU, especially those from labour-intensive sectors that had been hit by US President Donald Trump's 50 per cent tariffs on New Delhi. It will also help both sides diversify their trade relationships and reduce dependence on traditional markets.
To reflect growing ties with the EU, India had also invited European Council President Antonio Costa and European Union President Ursula von der Leyen as chief guests for its 77th Republic Day celebrations earlier on Monday. The two are currently in India, and are expected to leave after the summit on Tuesday.
US reaction to the India-EU trade deal
In light of the FTA to counter the effects of its tariff-based leverage policy, the Trump administration has alleged that the trade deal indirectly helped finance Moscow in the nearly four-year-old Russia-Ukraine war.
US treasury Secretary Scott Bessent restates 25% tariffs on India for buying Russian oil comments, pointing 'Guess what happened last week? The Europeans signed a trade deal with India'.
— Sidhant Sibal (@sidhant) January 26, 2026
PS: the India, EU trade deal will be announced tomorrowpic.twitter.com/oANif58XdA
"(The EU nations) are financing the war against themselves," declared US treasury secretary Scott Bessent in an interview with ABC News on Sunday (local time).
"We have put 25 per cent tariffs on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India. They—and just to be clear again, the Russian oil goes into India. The refined products come out, and the Europeans buy the refined products. They are financing the war against themselves," he added.
However, it must be noted that the India-EU trade deal has not yet been signed, only finalised.
