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In a clear signal that Europe is reshaping its global alliances, the European Union and India have finalized a free-trade agreement after nearly 20 years of talks, aiming to reduce EU dependence on the U.S. and China and strengthen ties with Asia’s fastest-growing economy.
Bloomberg reported that the European Commission President Ursula von der Leyen called it “the mother of all deals,” highlighting that it creates a free trade zone of two billion people. The announcement came Tuesday in New Delhi alongside European Council President Antonio Costa, as Indian Prime Minister Narendra Modi hailed the pact as “historic” for farmers, small businesses, and the country’s manufacturing and services sectors.
The agreement comes in the wake of global trade turbulence, including the political fallout from the Greenland episode, that has pushed the EU to look beyond traditional transatlantic partners. India, meanwhile, seeks to shake off its protectionist image, offset U.S. tariffs on labor-intensive exports, and expand its global footprint.
Under the deal, India will eliminate or cut tariffs on 96.6% of EU goods, while the EU will reduce or remove tariffs on 99.5% of Indian imports over seven years. European carmakers gain preferential access for up to 250,000 vehicles, more than six times the quota in recent agreements. The pact also includes commitments on student mobility, post-study visas, and concessions across 144 service sectors. India’s dairy sector remains excluded.
The deal is expected to double EU exports to India by 2032, especially in industries hit hard by U.S. tariffs, such as apparel, jewelry, and footwear. German industry groups welcomed the move, citing relief for small and medium-sized businesses struggling with volatile global trade.
Beyond trade, the EU and India also unveiled a security and defense partnership covering joint military production, classified information sharing, and increased coordination in the strategically vital Indian Ocean, an area where China has expanded its naval presence in recent years.
“India has risen, and Europe is truly glad about it,” von der Leyen said. “When India succeeds, the world is more stable, more prosperous, and more secure. Cooperation is the best answer to global challenges.”
The agreement still requires legal vetting and ratification by the European Parliament, expected to take roughly six months. For Modi, it is the fourth trade deal since May 2025, as India looks to open new markets, secure resources, and bolster investor confidence amid a shifting global landscape.
Bilateral trade between the EU and India stood at $136.5 billion in India’s 2024-25 fiscal year, with the EU representing more than 17% of India’s total exports. Observers say the pact not only strengthens economic ties but also signals Europe’s strategic pivot toward Asia, a move underscored by lessons learned from past missteps in transatlantic diplomacy.
*Source: Bloomberg
