The European Union and India have announced a landmark free trade agreement, ending nearly two decades of on-off negotiations, in a move both sides say will significantly deepen economic ties at a time of rising global protectionism and growing tensions with the United States.
European Commission President Ursula von der Leyen, speaking at a media briefing in New Delhi on Tuesday, described the pact in emphatic terms, saying: “We did it, we delivered the mother of all deals.”
Indian Prime Minister Narendra Modi hailed the agreement as “historic,” calling it the biggest free trade deal India has ever concluded.
The pact will allow freer trade in goods between the 27-member European Union and the world’s most populous country, together accounting for nearly 25 per cent of global gross domestic product and a combined market of about two billion people. It is expected to sharply reduce tariffs and expand market access for exporters on both sides.
Von der Leyen and European Council President António Costa are in Delhi for a bilateral summit with Modi, underscoring the political weight both sides are attaching to the deal.
In a statement, the European Commission said the agreement would eliminate tariffs on most exports of chemicals, machinery and electrical equipment, as well as aircraft and spacecraft, through phased reductions. One of the most significant concessions involves motor vehicles, with duties currently as high as 110 per cent to be cut to 10 per cent under a quota of 250,000 vehicles.
That quota is six times larger than the 37,000-unit quota India granted the United Kingdom under a trade agreement signed last July, according to Bloomberg.
For India, the deal is expected to lower costs for a wide range of European products entering the country, including cars, industrial machinery and agricultural food items, as import duties are reduced.
Brussels said the agreement would support investment flows, improve access to European markets and deepen supply-chain integration between the two economies.
Delhi, for its part, said almost all Indian exports would receive “preferential access” into the EU. Sectors expected to benefit include textiles, leather goods, marine products, handicrafts, gems and jewellery, where tariffs will be reduced or eliminated.
India said commodities such as tea, coffee, spices and processed foods would also benefit, while noting that it had “prudently safeguarded sensitive sectors, including dairy, cereals, poultry, soy meal, certain fruits and vegetables, balancing export growth with domestic priorities.”
Both sides have also agreed on a mobility framework aimed at easing short-term travel restrictions for professionals moving between India and the European Union.
“This is India’s biggest free trade agreement,” Modi said. “It will make access to European markets easier for India’s farmers and small business. It will also boost manufacturing and services sectors. It will boost innovative partnerships.”
The agreement comes against a backdrop of economic and geopolitical pressure from the United States on both sides.
India is grappling with 50 per cent tariffs imposed last year by President Donald Trump, even as talks aimed at securing a bilateral trade deal with Washington continue to drag on. The European Union, meanwhile, has also faced trade tensions with the US.
Last week, Trump threatened to escalate a trade dispute with European allies over their opposition to a proposed US takeover of Greenland, before later backing off.
That broader geopolitical context was evident in the leaders’ remarks.
On Tuesday, von der Leyen said: “This is the tale of two giants — the world’s second and fourth largest economies. Two giants which chose partnership in a true win-win fashion. A strong message that co-operation is the best answer to global challenges.”
A day earlier, Costa had said — without naming the United States — that the agreement would send “an important political message to the world that India and the EU believe more in trade agreements than in tariffs,” at a time when protectionism is on the rise and “some countries have decided to increase tariffs.”
Von der Leyen and Costa arrived in Delhi over the weekend and were chief guests at India’s Republic Day celebrations on Monday. On Tuesday, they posed for photographs with Modi, with visible warmth between the leaders.
The agreement will require approval by the European Parliament and the European Council, with formal signing expected later this year.
Beyond trade, India and the European Union are also advancing talks on security, defence co-operation and climate action.
On Tuesday, India’s Defence Minister Rajnath Singh said he had discussed a wide range of bilateral security and defence issues with the European Commission’s Vice-President Kaja Kallas, including opportunities to integrate supply chains, build trusted defence ecosystems and develop future-ready capabilities.
According to Reuters, the two sides are working on a draft security and defence partnership covering areas such as maritime security, cyber threats and structured defence dialogue.
The European Union is India’s largest trading partner in goods, with bilateral merchandise trade reaching $136 billion in the 2024-25 financial year — nearly double the level recorded a decade ago.
Negotiations for the deal first began in 2007 but stalled in 2013 over disagreements on market access and regulatory standards. Talks were formally revived in July 2022, with negotiators from both sides pushing hard in recent days to finalise outstanding chapters ahead of the EU leaders’ visit.
The agreement also comes as both Delhi and Brussels face mounting pressure to secure alternative markets for their exporters.
In the past seven months, India has signed major trade agreements with the United Kingdom, Oman and New Zealand. A pact signed in 2024 with the four-nation European Free Trade Association bloc — Switzerland, Norway, Iceland and Liechtenstein — has also come into force, while a trade deal with Australia was signed in 2023.
The European Union, meanwhile, concluded a long-awaited trade agreement with South America’s Mercosur bloc earlier this month, ending 25 years of negotiations.
Boluwatife Enome
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