European Union and Indian leaders have announced a significant trade agreement after almost twenty years of negotiations. The urgency of the deal heightened in the past six months due to tariffs imposed by U.S. President Donald Trump. Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen hailed the agreement as “the mother of all deals.” Modi emphasized that it is India’s largest and most comprehensive trade agreement, representing a third of global trade.
The free trade deal will reduce tariffs on nearly 97% of European goods imported to India by value and is expected to double EU exports to India by 2032. Von der Leyen described it as creating a market of two billion people, emphasizing the partnership between the world’s second and fourth largest economies in a win-win fashion.
The announcement of this landmark deal followed India’s Republic Day military parade, where European leaders were honored guests. The agreement will dismantle India’s high trade barriers, particularly opening its protected domestic market to European goods, including cars. Tariffs on European cars, like those from Volkswagen, Renault, and Mercedes-Benz, will be reduced significantly.
In return, India will benefit from eliminated tariffs on various goods entering the EU, including textiles, leather, gems, and jewelry. The deal also promises easier access for Indian skilled professionals to work in Europe, a significant advantage for the Indian labor force. Von der Leyen highlighted that the agreement sends a strong message of cooperation in the face of global challenges and reduces strategic dependencies.
Negotiations were expedited due to the impact of Trump administration’s trade policies and the conflict in Ukraine. The EU and India accelerated talks in response to tariffs imposed by Trump, which affected Indian exports to the U.S. The deal signifies a shift towards diversifying trade ties for India amidst growing U.S. threats.
The agreement, expected to be formally signed later this year and come into effect in early 2027 after legal vetting, demonstrates both sides’ eagerness to finalize a deal promptly. It excludes contentious topics like increased access to India’s agricultural and dairy sector, indicating a mutual desire to swiftly secure the agreement.