NEW DELHI (AP) — After practically 20 years of negotiations, India and the European Union introduced Tuesday they’ve reached a free trade agreement to deepen financial and strategic ties. The accord, which the EU chief described as the “mother of all deals,” may have an effect on as many as 2 billion folks.
The deal between two of the world’s greatest markets comes as Washington targets each India and the EU with steep import tariffs, disrupting established trade flows and pushing main economies to hunt alternate partnerships.
“This agreement will bring major opportunities for the people of India and Europe,” India’s Prime Minister Narendra Modi mentioned in a digital tackle to an power convention. “It represents 25% of the global GDP and one-third of global trade.”
The accord will see free trade on virtually all items between the 27 members of the EU and India, protecting the whole lot from textiles to medicines and bringing down excessive import taxes for European wine and vehicles.
India and the EU additionally agreed on a framework for deeper protection and safety cooperation, and a separate pact aimed toward easing mobility for expert employees and college students, signaling their partnership extends past commerce.
US strain propels India-EU trade deal
The negotiations for the India-EU deal received a new impetus after U.S. President Donald Trump’s strong-arm trade ways, together with threatening his European allies with punitive tariffs over their objections to Trump’s try and take management of Greenland.
Speaking at a joint information convention in New Delhi with European Commission President Ursula von der Leyen and European Council President António Costa, the Indian chief mentioned the partnership with the EU “will strengthen stability in the international system” at a time of ”turmoil in the international order.”
“Europe and India are making history today. We have concluded the mother of all deals,” von der Leyen mentioned in a publish on X.
In a speech later, she mentioned the accord was a story of “two giants” who selected partnership “in a true win-win fashion.” She additionally mentioned it sends “a strong message that cooperation is the best answer to global challenges.”
The deal is predicted to additional combine provide chains and strengthen joint manufacturing energy between the two economies. It can even minimize as much as 4 billion euros ($4.7 billion) in annual tariffs for exporters and create jobs for hundreds of thousands of employees in India and in Europe.
Deal to chop tariffs and ease regulatory limitations
A proper signing of the deal may come later this 12 months after officers undergo the authorized particulars of the textual content. It is predicted to enter impact early subsequent 12 months after the EU Parliament ratifies it.
India is predicted to cut back or eradicate tariffs for 96.6% of EU exports, whereas Brussels will reciprocate with related reductions in phases that ultimately cowl practically 99% of India’s shipments by trade worth, in keeping with statements from either side.
India’s sectors poised to realize from the deal embody textiles, attire, engineering items, leather-based, handicraft, footwear and marine merchandise whereas the EU’s positive factors shall be in wine, cars, chemical compounds and prescribed drugs, amongst others.
A quota system for cars, wines and whisky has been agreed on, bringing down steep duties.
The European Commission mentioned tariffs charged by India on EU-made vehicles will regularly go down from 110% to as little as 10%, whereas they are going to be totally abolished for automobile components after 5-10 years. Tariffs ranging as much as 44% on equipment, 22% on chemical compounds and 11% on prescribed drugs can even be largely eradicated.
On European wine, the tariffs in India would come down from 150% to twenty% for premium wines.
New Delhi has excluded from the deal dairy merchandise comparable to milk and cheese together with cereals, citing “domestic sensitivities” about these merchandise. The EU for its half received’t permit concessional tariffs on imports of Indian sugar, meat, poultry and beef merchandise, officers at Indian Trade Ministry mentioned.
Offsetting influence of larger US tariffs
India is seeking to diversify its export locations as half of a technique to offset the influence of larger U.S. tariffs, together with an additional 25% levy on Indian items for its unabated purchases of discounted Russian oil, bringing the mixed tariffs imposed by the United States on its Asian ally to 50%.
For the EU, the deal gives the bloc expanded entry to at least one of the world’s fastest-growing main economies, and helps European exporters and traders cut back their reliance on extra unstable markets.
Trade between India and EU stood at $136.5 billion in 2024 to 2025. The two sides hope to extend that to about $200 billion by 2030, Indian officers mentioned.
“Ultimately, the agreement is about creating a stable commercial corridor between two major markets at a time the global trading system is fragmenting,” mentioned Indian trade analyst Ajay Srivastava.
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The EU remains to be reeling from the aggressive strategy of its once-stalwart ally throughout the Atlantic. There’s a widespread sense of betrayal throughout the 27-nation bloc from Trump’s onslaught of larger tariffs, embrace of far-right events, and belligerence over Greenland, a semiautonomous territory of Denmark.
Brussels has accelerated its outreach to markets round the world. Over the previous 12 months, von der Leyen has signed offers with Japan, Indonesia, Mexico, and South America underneath the catchphrase “strategic autonomy,” which in apply is akin to decoupling from a U.S. seen by most European leaders as erratic.
