EU and India finalize major trade deal excluding agriculture

Thursday 15 January 2026 - 11:50

By: Dakir Madiha

EU and India finalize major trade deal excluding agriculture

The European Union and India are set to sign their largest free trade agreement yet on January 27 in New Delhi, with top EU officials traveling to the Indian capital to formalize a pact that deliberately excludes agriculture to shield India's politically sensitive farming sector. European Commission President Ursula von der Leyen confirmed to European Parliament members on Wednesday that the deal would proceed "without agriculture," calling it a "strong signal" for EU trade relations. Von der Leyen and European Council President António Costa plan to arrive in India for Republic Day celebrations on January 26, followed by the summit and signing ceremony the next day.

India's Commerce Secretary Rajesh Agrawal stated Thursday that both sides are "very close" to finalizing the agreement and working to wrap up talks before the leaders' meeting. Commerce and Industry Minister Piyush Goyal recently concluded intensive negotiations in Brussels with European Trade Commissioner Maroš Šefčovič, urging teams to resolve outstanding issues. If signed as planned, the deal would open EU access to a market representing about a quarter of the world's population. Bilateral trade reached $136.5 billion in 2024-2025, positioning the EU as India's top goods trading partner.

Excluding agriculture proved key to sealing the pact, as it employs roughly 44% of India's workforce, making broader European access to food markets politically risky for New Delhi. Brussels had already agreed to omit dairy and sugar products. However, the exclusion isn't total: EU trade chief Sabine Weyand told EU ambassadors that Brussels and New Delhi reached a principle agreement to cut India's steep 150% tariffs on European wines and spirits, though exact reductions remain undisclosed. European geographical indications for traditional foods and regional specialties were left out.

The timing carries strategic weight, as both India and the EU face U.S. trade pressures and seek to diversify economic ties. European Council President António Costa described India as a "pivotal global actor and natural strategic partner." Once inked, the EU pact would become India's 19th trade agreement and one of its most significant.