In a landmark development for global trade, the European Union and India have finalized a comprehensive trade agreement described as the “mother of all deals” by Indian Prime Minister Narendra Modi. The pact, concluded after twenty years of complex negotiations, establishes one of the world’s largest free trade zones encompassing approximately two billion people.
The agreement eliminates or substantially reduces tariffs on 97% of European exports to India, projected to save EU businesses up to €4 billion annually in customs duties. Key European sectors including automotive, agriculture, and services are positioned to gain significant market access, while India anticipates substantial benefits in textiles, gems and jewelry, and leather goods.
Market liberalization measures include the gradual reduction of India’s automotive tariffs from 110% to as low as 10%, while wine duties will decrease from 150% to 20%. The agreement completely eliminates tariffs on processed food products including pasta and chocolate, currently taxed at 50%.
EU Commission President Ursula von der Leyen characterized the agreement as historic, noting it provides “the highest level of access ever granted to a trade partner in the traditionally protected Indian market.” The pact represents approximately 25% of global GDP and one-third of worldwide trade.
The strategic alignment comes as both economic powers seek to diversify their trade relationships amid increasing global economic tensions. Bilateral trade in goods reached €120 billion in 2024, showing 90% growth over the past decade, with an additional €60 billion in services trade.
The agreement includes provisions for facilitated movement of seasonal workers, students, researchers, and professionals, alongside anticipated security and defense cooperation agreements. The partnership signals a significant reconfiguration of global trade alliances as both economies reduce dependencies on traditional partners.