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In a move poised to reshape global trade dynamics and counterbalance rising U.S. protectionism and Chinese economic dominance, India and the European Union sealed a historic free trade agreement on 27 January, committing to slash tariffs on the vast majority of goods exchanged between the two powers. The deal, hailed as the “mother of all deals” by Indian Prime Minister Narendra Modi, not only promises to double EU exports to India by 2032 but also underscores a deepening geopolitical partnership between the world’s largest democracy and the 27-nation bloc, at a time when multilateral alliances are under strain from U.S. tariff wars and territorial disputes. Co-chaired the 16th India-EU Summit with European Council President António Costa and European Commission President Ursula von der Leyen. Held productive discussions to take our Strategic Partnership to a higher level based on our shared values and a comprehensive bilateral… pic.twitter.com/CowD7DifA6 — Narendra Modi (@narendramodi) January 27, 2026 The agreement eliminates or reduces tariffs on 96.6% of traded goods by value from the EU side, potentially saving European firms €4 billion ($4.75 billion) in duties annually. In return, the EU will phase out tariffs on 99.5% of Indian imports over seven years, benefiting sectors like marine products, leather, textiles, chemicals, rubber, base metals, and gems and jewelry. Key exclusions include sensitive agricultural items such as soya, beef, sugar, rice, and dairy, reflecting both sides’ efforts to protect domestic farmers amid food security concerns. Geopolitically, the pact arrives amid escalating global frictions, including U.S. President Donald Trump’s imposition of 50% tariffs on select Indian goods and his aggressive bids for control over strategic assets like Greenland. These actions have prompted middle powers – such as India and EU members – to forge closer ties, reducing overreliance on Washington and Beijing. Bilateral trade between India and the EU, already at $136.5 billion for the fiscal year ending March 2025, slightly edges out India’s $132 billion with the U.S. and $128 billion with China, positioning this deal as a strategic pivot toward diversified supply chains and enhanced economic sovereignty. Experts view it as part of a broader realignment: the EU’s recent pacts with Mercosur, Indonesia, Mexico, and Switzerland, alongside India’s agreements with Britain, New Zealand, and Oman, signal a concerted effort to build resilient networks against unilateral trade disruptions and geopolitical instability, including Russia’s ongoing conflict in Ukraine and tensions in the Indo-Pacific. For India, the deal pries open its heavily protected market, with tariffs on EU automobiles plummeting from as high as 110% to 10% over five years, capped at 250,000 vehicles annually valued over €15,000. This will advantage European giants like Volkswagen, Renault, Mercedes-Benz, and BMW, while tariffs on wines drop immediately to 75% from 150%, eventually reaching 20%, and spirits to 40%. EU machinery, electrical equipment, chemicals, and steel will also see reductions, fostering technology transfers and joint ventures that could bolster India’s manufacturing ambitions under its “Make in India” initiative. On the environmental front, the agreement addresses the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes levies on carbon-intensive imports like steel and cement starting January 1, 2026. While offering no immediate exemptions, the EU has pledged flexibilities for India if extended to other nations, coupled with €500 million in financial aid over two years to support India’s greenhouse gas reduction efforts. This provision highlights the deal’s role in aligning economic growth with climate goals, potentially setting a model for Indo-European cooperation on global challenges like energy transition and sustainable development. Prime Minister Modi celebrated the accord with an unprecedented multilingual outreach on X (formerly Twitter), posting identical messages in 24 European languages – including English, French, German, Spanish, Italian, Polish, Bulgarian and others – to underscore the deal’s pan-European appeal. “This landmark India-EU trade agreement opens doors to prosperity, innovation, and stronger bonds for our peoples,” read the English version, which quickly amassed over 5 million likes and 1 million retweets within hours. Responses flooded in from across the continent, with users praising the move as a “bridge between East and West” and a “victory for multilateralism.” European leaders, influencers, and citizens echoed the sentiment, with hashtags like #IndiaEUPact and #UnitedForTrade trending in multiple countries, reflecting widespread optimism about enhanced cultural and economic ties. European Commission President Ursula von der Leyen echoed Modi’s enthusiasm, declaring, “Europe and India are making history today. This is only the beginning.” The pact’s momentum stems from two decades of negotiations, accelerated by recent global events, including Canadian Prime Minister Mark Carney’s call at Davos for middle powers to unite against economic coercion. In a post on X that many viewed as ironic and somewhat offensive, President Donald Trump dismissed the freshly signed EU-India free trade agreement as a “high school science project” doomed to fail, while boasting that only his “Daddy Tax” tariffs and leadership could truly enrich America. This can’t be real, can it? pic.twitter.com/kg3H0I0FfV — John O'Connell (@jdpoc) January 27, 2026 Implementation awaits legal vetting, expected to conclude in five to six months, with full rollout within a year. However, potential hurdles loom, as seen in EU lawmakers’ challenges to the Mercosur deal. Nonetheless, this agreement stands as a geopolitical milestone, fortifying democratic alliances and promoting a multipolar world order amid uncertainties from superpowers. With Reuters, with additional content by g.g. . Caption: India and the European Union sealed a historic free trade agreement on 27 January 2026. The deal, hailed as the “mother of all deals” by Indian Prime Minister Narendra Modi. [X account of Narendra Modi]

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