After Two Decades, India and EU Seal Historic Free Trade Deal

After nearly 20 years of negotiations, India and the European Union have finalized a landmark Free Trade Agreement (FTA), hailed as the “mother of all deals” by European Commission President Ursula von der Leyen. Prime Minister Narendra Modi described the agreement as “historic,” noting that it brings together economies representing nearly one-third of global trade.

The announcement was made in New Delhi in the presence of European Council President Antonio Costa. Leaders from the European Union were also the chief guests at India’s 77th Republic Day celebrations, underscoring the strategic significance of the partnership.

The breakthrough comes at a time of heightened global trade tensions, particularly involving the United States. India has faced increased US tariffs, including duties of up to 50% on Russian crude imports, while the EU’s trade relationship with Washington has also come under strain. Economists believe the US’s aggressive trade stance played a key role in accelerating the conclusion of the India-EU deal.

The FTA establishes freer trade between India the world’s fourth-largest economy and the European Union, comprising 27 member states and ranking as the world’s second-largest economy. Together, India and the EU account for roughly 25% of global GDP.

Under the agreement, EU exports to India are expected to double, giving European companies enhanced access to India’s massive consumer market of 1.4 billion people. Duties on more than 90% of traded goods will be reduced or eliminated, making products such as wine and automobiles more affordable. European automakers including Mercedes-Benz, BMW, and Volkswagen are expected to be major beneficiaries.

Indian exporters will also gain significantly, with improved access to EU markets through lower or zero tariffs on products such as handicrafts, marine goods, textiles, leather items, and gems and jewelry. Prime Minister Modi stated that the agreement would strengthen India’s manufacturing base and drive growth in services-related sectors.

While negotiations have concluded, the FTA is yet to be formally signed and awaits legal clearance. The agreement is expected to come into force by late 2026 or early 2027.

Trade experts suggest the deal could prompt the United States to fast-track its own trade discussions with India, highlighting how shifting global trade dynamics helped shape this long-awaited agreement.

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