- India secured a landmark trade deal with the US on February 3, 2026, slashing the reciprocal tariff on its goods from 50% to 18%.
- This followed a historic Free Trade Agreement (FTA) with the European Union signed on January 27, concluding nearly twenty years of negotiation.
- The two deals mark a significant turning point for India’s global trade standing, boosting export sectors like gems and textiles.
In a major geopolitical shift, India finalized two critical trade pacts with the US and European Union in early February 2026, dramatically reshaping its economic alliances. The agreement with the US, announced by Donald Trump following a call with Prime Minister Narendra Modi, reduced a major tariff burden effective immediately. Consequently, this pivot strengthens India’s position just as it assumes the BRICS presidency for the year.
The India-EU FTA, described as the “mother of all deals” by European Commission President Ursula von der Leyen, creates a free trade zone covering two billion people. It eliminates duties on over 96.6% of EU goods entering India, saving exporters up to $4.3 billion annually. However, the US agreement has drawn domestic criticism for being asymmetric, as India committed to buying over $500 billion in American products.
This dual alignment complicates India’s role within the BRICS bloc, whose intra-group trade has grown rapidly to $1.17 trillion. Meanwhile, Prime Minister Modi emphasized the EU deal would help Indian farmers and small businesses access a market representing 25% of global GDP. These concurrent deals force New Delhi to balance its BRICS commitments with its newly fortified Western partnerships, making its 2026 leadership highly consequential.
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