New Delhi – India and the European Union are set to announce a historic free trade deal that promises to fundamentally reshape bilateral relations across multiple sectors, creating one of the world’s largest integrated markets encompassing two billion people and representing nearly a quarter of global GDP.
Historic Milestone After Prolonged Negotiations
The free trade deal represents the culmination of nearly two decades of diplomatic efforts. India and the European Union first launched negotiations for this free trade deal in 2007, but talks were suspended in 2013 due to a gap in ambition between the two parties. The negotiations were relaunched in June 2022, leading to the comprehensive agreement being announced today.
This free trade deal is expected to bring qualitative changes in deepening overall bilateral ties across a range of sectors. The broad focus of the agreement encompasses trade, defence and security, climate change, critical technologies, and strengthening the rules-based global order that both parties consider essential for international stability.
Summit Leadership and Republic Day Celebrations
Prime Minister Narendra Modi will host European Commission President Ursula von der Leyen and European Council President Antonio Costa at the summit announcing the free trade deal. Both European leaders graced India’s 77th Republic Day celebrations at Kartavya Path as chief guests, underscoring the significance of the emerging partnership.
Von der Leyen stated last week that India and the EU are on the cusp of a “historic trade agreement” through this free trade deal, emphasizing that it would create a market comprising two billion people. This massive integrated market will account for almost a quarter of global GDP, making it one of the most significant economic partnerships in the world.
Strategic Context and Global Implications
The free trade deal comes at a particularly significant moment in global geopolitics. Europe is actively seeking to reduce its dependence on both the United States and China, choosing instead to deepen diplomatic and economic ties with other regions. The two sides are expected to produce a broader vision to navigate uncertainties triggered by US President Donald Trump’s policies.
India and the European Union have maintained strategic partnership status since 2004, and this free trade deal represents the natural evolution of that relationship into deeper economic and security cooperation. While the two sides don’t see eye-to-eye on everything, they share core interests including maintaining a stable international order.
Defence and Security Partnership Framework
Beyond the commercial aspects, the free trade deal will be accompanied by a Security and Defence Partnership that facilitates deeper defence and security cooperation between India and the European Union. This defence framework represents a significant strategic dimension to the free trade deal, extending the partnership well beyond purely economic considerations.
The Security and Defence Partnership will bring interoperability in the defence domain and open avenues for Indian firms to participate in the EU’s SAFE programme. SAFE, or Security Action for Europe, is the European Union’s 150 billion euro financial instrument designed to provide financial support to member states to accelerate defence readiness.
Worker Mobility and Migration Framework
A memorandum of understanding on facilitating the mobility of Indian workers to Europe is expected to be another key outcome accompanying the free trade deal. This mobility agreement will provide a framework for advancing mobility initiatives by EU member states with India, addressing critical labour market needs in Europe.
France, Germany, and Italy are among the European nations that have already established migration and mobility partnerships with India. The free trade deal is expected to expand and formalize these arrangements across the broader European Union, creating standardized pathways for Indian professionals and workers to contribute to European economies.
Economic Scale and Trade Statistics
The economic significance of the free trade deal becomes evident when examining existing trade volumes. The EU, as a bloc, currently serves as India’s largest trading partner in goods. For the financial year 2024-25, India’s total trade in goods with the EU was worth approximately $136 billion, with exports around $76 billion and imports at $60 billion.
The free trade deal is expected to substantially increase these figures by reducing tariff barriers, streamlining customs procedures, and creating new opportunities for businesses on both sides. The ties between India and the EU have been on an upswing over recent years, and this agreement formalizes and accelerates that positive trajectory.
Global Challenges and Collaborative Approach
Leaders are likely to deliberate on pressing global challenges as part of discussions surrounding the free trade deal, including the Russia-Ukraine war and other geopolitical tensions. The agreement provides a framework for coordinated responses to international crises while respecting each party’s sovereign interests and perspectives.
The free trade deal also encompasses cooperation on climate change and critical technologies, recognizing that 21st-century partnerships must address environmental sustainability and technological advancement alongside traditional trade concerns. This comprehensive approach distinguishes the India-EU free trade deal from conventional commercial agreements, positioning it as a model for modern international partnerships that address the full spectrum of contemporary global challenges.
