India and the European Union have finalized negotiations on a comprehensive trade agreement described as historic by both parties, with formal announcement scheduled for Tuesday. The breakthrough concludes nearly two decades of intermittent discussions and creates a free trade pathway between the world’s largest democracy and the 27-nation bloc, collectively representing 25% of global GDP and approximately 2 billion consumers.
Indian Trade Secretary Rajesh Agrawal characterized the agreement as “a balanced, forward-looking deal for better economic integration with the EU” that will significantly accelerate trade and investment flows between the signatories. Current bilateral trade stands at $136.5 billion for the fiscal year ending March 2025.
The agreement emerges against a backdrop of strained relations with the United States, where President Donald Trump’s tariff policies—including 50% duties on Indian goods—have prompted trading nations to seek alternative partnerships. This strategic realignment follows the EU’s recent pact with Mercosur and India’s simultaneous agreements with Britain, New Zealand, and Oman.
Final negotiations required delicate compromises on automotive and steel sectors. The EU secured reduced import duties on European vehicles, with India planning to slash car tariffs from 110% to 40%, while New Delhi obtained eased restrictions on its steel exports. Sensitive agricultural and dairy products were excluded from the agreement to protect India’s subsistence farmers.
The formal signing will occur after a five-to-six month legal review process, with implementation expected within twelve months. The agreement marks India’s largest trade partnership and represents the EU’s most significant market opening in South Asia.