India and the European Union have formally signed a historic Free Trade Agreement that leaders on both sides are calling the “mother of all trade deals,” marking one of the most significant economic partnerships in recent times. The pact, concluded after nearly 20 years of intermittent negotiations, is expected to reshape economic ties between two of the largest global markets and create preferential access for goods and services across a huge consumer base.
Prime Minister Narendra Modi and European Commission President Ursula von der Leyen described the agreement as a transformative milestone that could boost trade flows and strengthen industrial cooperation. The deal is set to cover products worth a significant share of global commerce and aims to reduce or eliminate tariffs on over 90 percent of goods traded between India and the EU, including textiles, chemicals, electronics and engineering items.
Officials said the pact is expected to save European exporters billions in duties annually while giving Indian producers easier access to EU markets. Under the deal, tariffs on many European imports into India, such as automobiles, wine and spirits, will be phased down significantly over time, and Indian exporters stand to gain preferential access in sectors where they compete effectively.
The agreement gains additional significance amid ongoing global trade tensions and protectionist measures, especially those linked to recent US tariff policies. The Trump administration’s high tariffs on Indian goods and broader tariff actions against several trading partners have prompted market shifts, and analysts say the India-EU pact could help both economies counterbalance the impact of such barriers while signalling a preference for reduced trade friction.
European leaders have framed the deal not just as an economic milestone but as a political statement against rising protectionism. European Council President Antonio Costa said the agreement underscored faith in rules-based trade and partnership rather than unilateral tariff impositions. The pact also reflects broader geopolitical shifts as nations diversify trade ties amidst a changing global order.
India’s bilateral trade with the EU already stood at more than $135 billion in goods and services in 2024-25, making the bloc its largest trading partner. With reductions in trade barriers, analysts project further expansion of two-way commerce and deeper integration into global supply chains. The implementation timeline could span several years, with phased tariff cuts and parallel negotiations on investment and services provisions.
Implementation of the agreement will depend on ratification processes in EU member states and parliamentary approvals. For now, the signing has drawn attention not only in New Delhi and Brussels but also in Washington, where reactions highlight shifting trade dynamics and the strategic significance of forging large, diversified economic partnerships in an era of trade disruption.