India and the European Union have finalized a major trade agreement, marking the culmination of nearly 20 years of intermittent negotiations. The deal aims to deepen economic ties amid rising global trade tensions.
European Commission President Ursula von der Leyen called the pact “the mother of all deals,” while Indian Prime Minister Narendra Modi described it as “historic,” highlighting its significance for both economies. Together, India and the EU represent nearly a quarter of global GDP and a combined market of two billion consumers.
The agreement will gradually eliminate tariffs on a wide range of goods. For the EU, this includes chemicals, machinery, electrical equipment, and aerospace products, while duties on motor vehicles will drop from as high as 110% to 10% under a quota of 250,000 units—substantially higher than India’s previous UK quota. Indian exports to the EU, including textiles, leather, marine products, handicrafts, and gems, will gain preferential access. Certain sensitive sectors, such as dairy, cereals, poultry, and some fruits and vegetables, will remain protected.
Leaders emphasized that the pact will not only reduce trade costs but also encourage investment, deepen supply-chain integration, and foster collaboration in manufacturing and services. A mobility framework for professionals will also ease short-term travel between India and EU countries.
The deal comes against a backdrop of geopolitical pressures, including US trade policies that have imposed high tariffs on both EU and Indian goods in recent years. EU leaders framed the agreement as a “win-win” approach and a clear endorsement of trade cooperation over protectionism.
Alongside trade, India and the EU are advancing talks on security, defense, and climate collaboration. Discussions include building resilient and trusted supply chains in defense sectors, maritime security, and cyber defense.
India is the EU’s largest trading partner in goods, with bilateral merchandise trade reaching $136 billion in 2024-25—nearly doubling over the past decade. The agreement is expected to be formally signed later this year, after approval from the European Parliament and Council.
This landmark deal positions both India and the EU to diversify markets, enhance trade flows, and strengthen economic resilience amid shifting global trade dynamics.
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