How the India–EU trade agreement could create a $27 trillion market

By Muhammad MubashirPublished On 28 Jan 2026

The agreement, announced on Tuesday, came together over nearly two decades of intermittent negotiations and during a geoeconomic crisis triggered by United States President Donald Trump’s trade war.

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The deal between India and the 27-nation EU covers about 2 billion people and represents a combined market of nearly $27 trillion and about 25 percent of the global gross domestic product (GDP).

European Commission President Ursula von der Leyen and European Council President Antonio Costa joined Indian Prime Minister Narendra Modi in New Delhi on Monday as honorary guests for Republic Day and its annual military parade.

“This agreement will bring major opportunities for the people of India and Europe,” Modi said while addressing an energy conference virtually on Tuesday before an India-EU summit.

“Europe and India are making history today,” von der Leyen wrote in a post on X. “We have created a free-trade zone of two billion people, with both sides set to benefit. We will grow our strategic relationship to be even stronger.”

The deal is expected to significantly reduce tariffs for India and the EU.

So what’s in the deal? And how will Trump – who slapped India with 50 percent tariffs last year in part as punishment for continuing to buy Russian oil – take it?