India, European Union seal ‘mother of all’ trade deals
New Delhi, Jan 27: India and the European Union on Tuesday announced a landmark free trade agreement, ending nearly two decades of on-and-off negotiations and marking a major shift in global trade ties amid growing tensions with the United States.
European Commission President Ursula von der Leyen called it the ìmother of all dealsî after meeting Prime Minister Narendra Modi in New Delhi.
PM Modi described the agreement as ìhistoricî.
The deal makes a vast free trade zone linking the EUís 27 countries with India.
Together, they account for nearly 25 percent of global GDP and represent a market of around two billion people.
Under the agreement, tariffs on a wide range of goods would be reduced or removed over time, giving businesses on both sides easier access to each otherís markets.
On the occasion, PM Modi said, ìThis historic agreement will facilitate access to the European market for our farmers and small industries, create new opportunities in manufacturing, and further strengthen cooperation between our services sectors.î
He said that this FTA would boost investment between India and the European Union, create new innovation partnerships, and strengthen supply chains globally.
ìThis means it is not just a trade agreement. This is a new blueprint for shared prosperity,î the PM said. ìToday, our trade between us is worth 180 billion Euros. More than 8 lakh Indians live in the European Union countries and are actively contributing.î
The European Commission said duties would be eliminated on most exports of chemicals, machinery, electrical equipment, aircraft, and spacecraft.
It said that import taxes on cars, currently as high as 110 percent, would be cut to 10 percent under a quota of 2.5 lakh vehicles.
The deal is expected to lower prices for European products entering India, including cars, machinery, and some agricultural food items.
Sensitive sectors such as dairy and sugar have been kept outside the agreement.
ìThis is a historic agreement,î PM Modi said. ìIt will make access to European markets easier for Indiaís farmers and small businesses. It will boost manufacturing, services, and innovation partnerships.î
European Commission President Ursula von der Leyen said the agreement would support investment, improve access to European markets, and strengthen supply chains.
ìWe have created a free trade zone of two billion people, with both sides set to benefit. This is only the beginning,î she said.
European Council President AntÛnio Costa said the deal sends an important political signal at a time when protectionism is rising globally.
Without naming the US, he said India and the EU believe in trade agreements rather than higher tariffs.
The announcement comes as both India and the EU face economic and geopolitical pressure from Washington.
India is dealing with steep tariffs imposed by US President Donald Trump last year, while the EU has also faced trade tensions with the US in recent months.
Von der Leyen and Costa were in Delhi for a bilateral summit and were the chief guests at Indiaís 77th Republic Day celebrations.
The formal signing of the agreement is expected later this year, after approval by the European Parliament and the European Council.
Alongside trade, India and the EU are stepping up cooperation in defence, security, and climate action.
PM Modi, in his concluding remarks, said, ìSometimes there comes a moment in national relations when history itself says, ëThis is where the direction changed, this is where a new era began.í Todayís historic summit between India and the European Union is one such moment.î
He thanked President Costa and President von der Leyen for this unprecedented visit, commitment, and friendship with India.
The EU is Indiaís largest trading partner in goods.
Bilateral trade reached about 136 billion US Dollars in 2024-25, nearly double the level of a decade ago.
Talks on the trade deal began in 2007, stalled in 2013, and were formally restarted in 2022.
With pressure growing on both sides to find reliable markets for exporters, the agreement is seen as a major step towards closer economic and strategic ties between India and Europe.
PM HIGHLIGHTS ‘NEW ERA’ IN INDIA-EU TIES
PM Modi said India-European Union relations were entering a new era, citing the conclusion of the India-EU Free Trade Agreement and the growing alignment between the worldís two largest democratic blocs.
Addressing the India-EU Business Forum at Bharat Mandapam in New Delhi, he said the visit of the Presidents of the European Council and the European Commission, their role as Republic Day chief guests, and the finalisation of Indiaís largest-ever FTA together signal an unprecedented strengthening of ties.
PM Modi said that bilateral trade had doubled over the past decade to 180 billion Euros, with more than 6000 European companies operating in India and EU investments exceeding 120 billion Euros.
He said that the Indian investments in the EU had reached nearly 40 billion Euros.
The PM said the comprehensive FTA would boost market access for Indian products like textiles, gems, and jewellery, auto components and engineering goods, while also benefiting farmers, fishermen and the services sector.
Calling on businesses to seize the opportunity, he urged deeper cooperation in building resilient supply chains, defence and frontier technologies, and clean energy and sustainability, adding that the responsibility to translate the agreement into growth now rests with the business community.
