India, EU agree on landmark free trade deal

KABUL (Pajhwok): India and the European Union have announced a landmark free trade agreement aimed at significantly deepening economic and strategic ties, according to international media reports.

EU Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi said the deal creates a free trade zone covering nearly two billion people and about 25 percent of global GDP, AL Jazeera reported.

Von der Leyen, speaking during her visit to New Delhi, described the agreement as “the mother of all deals,” saying both sides stand to benefit substantially.

Modi said the agreement, reached after nearly two decades of intermittent negotiations, would generate major opportunities for India’s 1.4 billion people and millions across the EU.

He highlighted gains for Indian sectors such as textiles, gems and jewellery, and leather goods.

The pact comes as Brussels and New Delhi seek to diversify trade partnerships amid US tariffs and Chinese export controls. It will gradually open India’s traditionally protected market to the EU, its largest trading partner.

Formal signing will follow legal vetting expected to take five to six months, with implementation likely within a year, Reuters reported, citing an Indian government official.

Bilateral trade in goods between India and the EU reached €120 billion ($139bn) in 2024, up nearly 90 percent over the past decade, while services trade totalled about €60 billion ($69bn), according to EU data.

Under the agreement, tariffs on 96.6 percent of EU goods exported to India will be eliminated or reduced, saving European exporters up to €4 billion annually. Tariffs will be largely removed on machinery, chemicals, pharmaceuticals, aircraft and spacecraft. Car tariffs will gradually fall to 10 percent under a quota of 250,000 vehicles a year.

Tariffs on wine, spirits and beer will be cut, while duties on fruit juices and processed foods will be eliminated. EU service providers will also gain improved access to Indian markets, including financial and maritime services.

Von der Leyen said the deal grants the EU its highest-ever level of access to the Indian market, offering a strong competitive advantage in key industrial and agricultural sectors.

Negotiations intensified after Russia’s invasion of Ukraine and were further accelerated by US tariff policies. Alongside the trade pact, India and the EU also announced a new security and defence partnership.

The agreement follows recent EU trade deals with Mercosur, Indonesia, Mexico and Switzerland, while India has concluded pacts with the UK, New Zealand and Oman.

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