India and EU Announce Historic Free Trade Agreement

India and the European Union (EU) have finalized a historic free trade agreement, marking a major milestone in bilateral relations between the world’s most populous country and the 27-nation European bloc. The announcement was made by European Commission President Ursula von der Leyen following high-level talks in New Delhi with Indian Prime Minister Narendra Modi.
Speaking after the meeting, von der Leyen described the pact as the “mother of all deals” and said it would create a free trade zone covering nearly two billion people. “We have completed the mother of all deals. We are creating a free trade area for two billion people. Both sides will benefit. This is only the beginning—we will further strengthen our strategic partnership,” she wrote on social media platform X.
Prime Minister Modi also hailed the agreement as historic, saying it would make it easier for Indian farmers and small entrepreneurs to access European markets. He added that the deal would strengthen India’s manufacturing and services sectors and foster new innovative partnerships between the two sides.
According to the European Commission, the agreement предусматриes a gradual reduction of tariffs on a wide range of products, including chemicals, machinery, electrical equipment, aircraft and aerospace components. Notably, India’s current 110 percent import duty on cars will be reduced to 10 percent for up to 250,000 vehicles, making European automobiles significantly cheaper in the Indian market.
As a result, European exports such as cars, machinery and agricultural food products are expected to become more affordable in India. However, sensitive agricultural items like dairy and sugar have been excluded from the agreement.
The deal will open the path for freer trade in goods between the EU and India, which together account for nearly 25 percent of global GDP and represent a combined market of around two billion people. Both sides are expected to significantly lower tariffs and improve market access under the agreement.
The EU is currently India’s largest trading partner. In the 2024–25 fiscal year, bilateral trade in goods reached USD 136 billion, nearly doubling over the past decade. Negotiations on an India–EU trade pact began in 2007 but stalled in 2013 due to market access and regulatory differences. Talks resumed in July 2022 and have now culminated in this landmark agreement.
The deal comes at a time of growing geopolitical and economic realignments, as both India and the EU seek to deepen partnerships amid strained relations with the United States and broader global trade uncertainties.