India-EU Free Trade Agreement Could Start Working in Early 2027: How the EU Approves a Trade Deal
The Union Commerce Ministry said the India-European Union (EU) Free Trade Agreement (FTA) is expected to be signed by the end of 2026.
Once signed, the deal could become operational (actually start working) within four to five months, which means early 2027.
India and the EU announced the end of negotiations on 27 January 2026 at the 16th India-EU Summit in New Delhi. Talks had started in 2007, stopped around 2013 and restarted in June 2022.
In September 2026, the European Commission sent the agreement to the Council of the EU and asked for permission to sign and conclude it (formally accept it). After signing, the European Parliament must also give its consent.
The deal aims to give better market access (easier entry for goods and services) and more investment links between India and the 27 EU member states. India is completing its own approval process at the same time.
A separate India-EU Investment Protection Agreement is still being negotiated.
Free Trade Agreements: Concept and WTO Framework
A Free Trade Agreement (FTA) is a deal in which two or more partners remove or sharply cut the import taxes (tariffs) on most goods they trade with each other. Each side still keeps its own tariffs for countries outside the deal. Modern FTAs also cover services, investment, government buying, intellectual property and rules on standards. Under World Trade Organization (WTO) rules, an FTA is allowed only if it covers "substantially all the trade" between the partners.
The India-EU deal is one of the biggest FTAs India has ever negotiated. The news is about the last stage of its life before it starts working: signing, approval on both sides, and entry into force in early 2027.
European Union Structure and FTA Ratification
The European Union (EU) is a group of 27 European countries that have joined together to work as one single market. Inside it, goods, services, money and people move freely, almost as if the EU were one country. Because all members charge the same import tax on goods coming from outside, no single member can sign its own trade deal. The EU signs trade deals for all 27 together, and every deal must pass through a fixed chain of approvals before it starts working.
The India-EU FTA has finished negotiations and legal checks, and the Commission has asked the Council for permission to sign. Because the trade deal was kept separate from the investment pact, it can follow the faster EU-only route: Council approval, signing by the end of 2026, European Parliament consent and Council conclusion. That is why entry into force is expected in early 2027, four to five months after signing.
Carbon Border Adjustment Mechanism (CBAM): The EU's Carbon Charge on Imports
The Carbon Border Adjustment Mechanism, or CBAM, is an EU rule that puts a charge on the carbon pollution released while making certain goods abroad, when those goods enter the EU. It is like a carbon price collected at the border. Its aim is to make imported goods pay the same carbon cost that EU factories already pay under the EU's own carbon market. It worries Indian exporters of steel and aluminium the most.
Lower tariffs under the FTA will help Indian goods, but CBAM is a separate cost that the FTA does not remove. So even after the deal starts in 2027, steel and aluminium exporters will still have to measure and pay for the carbon in their products.
- India-EU FTA: negotiations concluded on 27 January 2026 at the 16th India-EU Summit, New Delhi
- Talks launched 2007, stalled around 2013, relaunched June 2022
- Signing expected by end-2026; entry into force expected 4–5 months later, in early 2027
- European Commission sent signature and conclusion proposals to the Council in September 2026
- Remaining EU steps: Council decision on signature → signing → European Parliament consent → Council decision on conclusion
- India cuts tariffs on 96.6% of EU goods exports by value; EU removes tariffs on about 91% of Indian exports by value (about 99.3% including partial cuts)
- Car tariffs: from up to 110% down to as low as 10%, within a 2.5 lakh-unit annual quota
- The two economies: about 25% of global GDP; bilateral goods trade over $136 billion
- Investment Protection Agreement: still under negotiation
- CBAM definitive (paying) phase: from 1 January 2026; no FTA exemption for India