Markets & Macro · Daily brief
The largest bilateral agreement either side has signed removes duties on textiles, leather, pharma and gems, and is expected to come into force by end of 2026.
India and the European Union finalized their biggest bilateral trade agreement on January 27, 2026. The pact covers 2 billion people and represents a combined market of $27 trillion—roughly 25% of global GDP.
Indian exporters gain immediate tariff relief on goods critical to the country's manufacturing base. Textiles, leather, gems and jewelry now enter the EU duty-free, with $33 billion in exports freed from tariffs. The textile sector alone stands to add 6–7 million jobs.
EU consumers will see lower prices on Indian wines (tariffs drop to 20–30%), pharmaceuticals and chemicals (tariffs eliminated), while Indian car exports gain a 250,000-unit quota at reduced 10% tariffs. The agreement is also expected to save €4 billion annually in tariff costs.
Commerce Minister Piyush Goyal said the agreement is expected to come into force by the end of 2026, following ratification by both sides. The timing positions India as a manufacturing alternative to China as global supply chains reshape.
Sources
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