India and the European Union reached a free trade agreement after 18 years

January 29, 2026

Abhishek Vij

On Tuesday, January 27, 2026, India and the European Union reached an agreement that had been under discussion for the past 18 years. The European Union comprises 27 countries. On the other side is India, which boasts a huge demand market with a population of 1.45 billion. Every prosperous country engaged in foreign trade is attracted to India’s demand market. Therefore, India does not hesitate to strike trade agreements with various countries. Many countries around the world are troubled by US President Donald Trump’s authoritarian policies regarding tariff wars.

This year, total Indian exports between India and the US have declined. Although it was said that the US tariff hike would have no impact on India’s exports, it has. Given India’s demand market, Donald Trump has occasionally expressed his closeness to Prime Minister Narendra Modi and India, continuing trade talks with India and talking about an agreement, but so far, this agreement has not been reached. The US wants to freely sell its agricultural and dairy products to India. Since India is an agricultural and farming nation, it cannot compromise the interests of its farmers and dairy producers. This is why a trade agreement has not yet been reached; only talks of continuing trade negotiations are being discussed.

Prime Minister Narendra Modi has signed several trade agreements, highlighting India’s diversified trade policy, but reaching a multilateral trade agreement with 27 European Union countries would be considered a major success. On the occasion of India’s 77th Republic Day, India invited European Council President Antonio Costa and European Union President Ursula von der Leyen to India as chief guests to finalize the agreement. The agreement has been reached. Due to its widespread significance, this agreement is being called the “Mother of All Deals.” The significance of the agreement lies in the fact that a trade agreement has been reached between approximately 2 billion people worldwide. 1.45 billion are from our country, while 45 to 55 million belong to European countries.

Our country’s trade agreement with the European Union will come into effect in 2027. This agreement will undoubtedly boost the country’s exporters. The European Union’s member countries have entered into this agreement with an open mind. The Western world is experiencing an economic recession. The trade agreement with India has opened up a large market for their products. The beauty of this agreement is that it excludes grain products and dairy products. Thus, Modi’s commitment to protecting farmers’ interests is also fulfilled.

The agreement has been called the “Mother of All Deals” because it marks India’s agreement with 27 European countries in one go. This fulfills India’s policy of diversifying its foreign trade. Clearly, Indian businesses will now receive demand from these countries, leading to greater profits. Furthermore, this agreement will provide us with another opportunity to increase exports, all under the framework of free trade. This is why this agreement is being widely praised. If this agreement reduces our dependence on the US, then the US and its President Donald Trump should consider reducing the impact of their tariff policies on India.