The European Union and India have reached a free trade agreement after nearly two decades of negotiations, as both sides seek to deepen economic ties and offset the impact of Washington’s tariff policies.
“We have concluded the mother of all agreements,” European Commission President Ursula von der Leyen said on X on Tuesday. “We have created a free trade zone for two billion people, from which both sides should benefit. » Von der Leyen and European Council President Antonio Costa are in New Delhi to mark the moment.
Indian Prime Minister Narendra Modi, who announced the conclusion earlier in the day, said the deal would strengthen India’s manufacturing and services sectors while boosting investor confidence in Asia’s third-largest economy.
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The deal is expected to double EU goods exports to India by 2032 by eliminating or reducing customs duties on 96.6% of EU goods exports to India, according to a European Commission press release on Tuesday. These products range from automobiles and industrial goods to wine, chocolates and pasta.
At the same time, the EU will eliminate or reduce customs duties on 99.5 percent of goods imported from India over seven years, the Indian Ministry of Commerce and Industry announced.
It is the most ambitious trade agreement India has ever signed. New Delhi has agreed to allow up to 250,000 European-made vehicles to enter the country at preferential duty rates – a quota more than six times higher than its recent agreements. Bloomberg News reported. It will also reduce customs duties on premium European wines from 150 to 20 percent, gradually, according to a European Commission document.
The deal would also give India a competitive advantage in exporting labor-intensive products hit hard by high tariffs imposed by US President Donald Trump, including clothing, gems, jewelry and shoes. Brussels also proposed binding commitments on student mobility and post-study visas, as well as concessions in 144 service sectors. India excluded dairy products from the deal.
The deal is expected to be officially signed after a legal review, which is expected to take around six months. The European Parliament will also have to ratify it.
The announcement comes weeks after India signed trade deals with New Zealand and Oman. Days earlier, the EU finally agreed a separate, long-standing trade deal with the Mercosur bloc of South American countries. However, European legislators have not yet ratified this agreement.
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Tuesday’s deal marks Modi’s fourth trade deal since last May, following agreements with the United Kingdom, Oman and New Zealand.
Next, Modi is seeking partnerships with the Mercosur bloc, Chile, Peru and the Gulf Cooperation Council, hoping to secure strategic resources and increase India’s global footprint.
Bilateral trade between the EU and India stood at $136.5 billion in India’s fiscal year to March 2025, with the EU accounting for more than 17% of India’s total exports, according to official data. Conversely, India is the EU’s ninth largest trading partner.
Security Partnership
The EU and India are also moving closer together on the defense front, unveiling a new security partnership.
The agreement offers above all a political signal – part of an EU effort to broaden its alliances as Trump undermines transatlantic ties. The EU has recently concluded similar agreements with countries such as the United Kingdom and Canada.
Both sides pledged to strengthen defense cooperation, while officials also opened the door to increased maritime security cooperation and possible joint naval exercises.
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