New Delhi, India

Leaders of India and the European Union have announced the conclusion of a landmark Free Trade Agreement (FTA), bringing to an end nearly two decades of intermittent negotiations and marking a defining moment in one of India’s most strategic global partnerships. The breakthrough comes at a time of heightened global trade tensions, particularly following the imposition of new tariffs by the United States, which lent fresh urgency to the talks over the past six months.

Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen both described the agreement as “the mother of all deals,” underscoring its scale and ambition. According to Modi, this is the largest and most comprehensive trade agreement India has ever signed, encompassing nearly one-third of global trade. Von der Leyen echoed the sentiment, describing the pact as a partnership between “two giants”—the world’s second- and fourth-largest economies—choosing cooperation and mutual benefit in an increasingly fragmented global trade environment.

At its core, the agreement establishes a combined market of nearly two billion people, with an estimated value exceeding INR 2091.6 lakh crore (USD 24 trillion). It is designed as a modern, rules-based framework that responds to contemporary economic challenges while deepening market integration between the two regions. The FTA provides unprecedented market access, covering more than 99 per cent of India’s exports by trade value, while preserving policy space for sensitive sectors and supporting India’s long-term development priorities.

A key feature of the deal is the gradual opening of India’s traditionally protected domestic market. Tariffs on European goods imported into India will be cut significantly, including a reduction in car import duties—from levels as high as 110 per cent to around 10 per cent—benefiting European automakers such as Volkswagen, Renault, and Mercedes-Benz. India has also agreed to lower duties on products such as European wine, chocolates, olive oil, and other consumer goods.

In return, Indian exporters will gain duty-free or reduced-tariff access to the EU for products including textiles, leather, gems, and jewellery. The agreement also promises improved mobility opportunities for highly skilled Indian professionals seeking to work in Europe, a development seen as a major boost for India’s workforce.

Trade between the two partners has already shown strong momentum. In 2024–25, bilateral merchandise trade stood at approximately INR 11.5 lakh crore (USD 136.54 billion), with Indian exports accounting for around INR 6.4 lakh crore (USD 75.85 billion). Services trade reached INR 7.2 lakh crore (USD 83.10 billion) in 2024. EU exports to India are expected to double by 2032.

Announced during India’s Republic Day celebrations—where senior EU leaders were honoured guests—the agreement signals a clear strategic intent. As von der Leyen noted, it sends a strong message that cooperation, rather than confrontation, remains the most effective response to global economic challenges in an era when trade is increasingly used as a strategic tool.