India and EU Sign Biggest Trade Deal to Boost Trade

New Delhi: India and the European Union have signed a historic trade agreement, called the “mother of all deals,” after nearly two decades of negotiations. The pact aims to create a free trade market of two billion people and strengthen economic ties.

Prime Minister Narendra Modi, along with European Commission President Ursula von der Leyen and European Council President Antonio Costa, announced the deal in New Delhi on Tuesday. Modi said the agreement “represents about 25 percent of global GDP and one-third of global trade” and will bring opportunities for both Indian and European citizens.

The agreement will cut or remove tariffs on nearly 97 percent of European exports, saving the EU up to 4 billion euros ($4.75 billion) annually. Key European sectors like agriculture, automotive, and services will gain first-mover advantages.

Tariffs on European cars in India will gradually fall from 110% to 10%, wine duties from 150% to 20%, and processed food tariffs, including pasta and chocolate, will be eliminated. European firms will also get preferential access to India’s financial services and maritime markets.

India expects growth in textiles, leather, gems and jewellery, and the service sector. Bilateral trade in goods reached 120 billion euros ($139 billion) in 2024, with an additional 60 billion euros ($69 billion) in services trade.

The agreement comes as India and the EU seek new markets amid US tariffs and Chinese export controls. Discussions also included a plan to allow easier movement for seasonal workers, students, and skilled professionals, along with security and defense cooperation.

Von der Leyen called it “a clear choice of strategic partnership and openness,” emphasizing that the deal shows a path forward in a fractured world.

India is expected to become the fourth-largest economy this year, according to the IMF, while the EU looks to India as a key market for investment and technology.