New Delhi – India and the European Union have officially completed negotiations for what is being called the “mother of all” agreements, with the trade deal signed creating a massive integrated market of two billion people representing nearly a fourth of global GDP, drawing significant international attention including scrutiny from the United States.
Historic Agreement After Years of Negotiations
Prime Minister Narendra Modi confirmed that the trade deal signed on Tuesday marks the culmination of negotiations that were relaunched in June 2022 after a hiatus of almost nine years. This represents the largest trade agreement that both the EU and India have ever concluded, with the trade deal signed ending one of the most complex and prolonged trade negotiations in recent history.
The announcement that the trade deal signed comes at a strategically significant moment, as countries worldwide seek to derisk their economies amid trade disruptions caused by policies of the President Donald Trump administration in the United States. The timing suggests both parties view this agreement as essential for economic stability and strategic independence.
Massive Tariff Reductions and Economic Benefits
The trade deal signed slashes tariffs on almost 97 percent of EU exports entering India, representing unprecedented market access. According to details released by the European Union, tariffs on 96.6 percent of EU goods exports will be eliminated or reduced, saving up to €4 billion per year in duties on European products.
Key benefits for EU exporters under the trade deal signed include a competitive advantage representing the biggest trade opening India has given to any trade partner, privileged access to India for EU service providers in financial services and maritime services, simplification of customs procedures, protection of EU intellectual property such as trademarks, and a dedicated chapter for small EU businesses.
Consumer Benefits for Indian Market
The trade deal signed brings significant benefits to Indian consumers through dramatic price reductions on European goods. The giant agreement will gradually lower India tariffs on EU cars from a top rate of 110 percent to as low as 10 percent, while duties on wines progressively decrease from 150 percent to as low as 20 percent.
Currently at 50 percent, tariffs on processed foods including pasta and chocolate will be completely eliminated under the trade deal signed. These reductions mean European wines, chocolates, pasta, and automobiles will become substantially more affordable for Indian consumers, potentially transforming consumption patterns in these categories.
Strategic Importance for India
The EU is India’s biggest trade partner, with trade in goods worth $135 billion in 2023-24. The trade deal signed will significantly boost trade between India and EU member states precisely when such partnerships are most valuable for economic resilience.
The agreement is expected to benefit labour-intensive sectors such as textiles, leather, chemicals, electronics, and jewellery as they do not compete with European manufacturers. India’s exporters currently face tough competition from duty-free and quota-free shipments from least developed countries such as Bangladesh. Once the trade deal signed is implemented, this duty disadvantage will end completely.
Counterweight to Trump’s Tariff Policy
The trade deal signed can be interpreted as a strategic counterweight to Donald Trump’s tariff-heavy approach that has affected many nations, including India and European Union countries. Donald Trump in August last year announced 25 percent tariffs on Indian imports to the US and an additional “penalty” of the same amount over Russian oil purchase, taking total duties to 50 percent.
For the EU, Trump imposed 25 percent tariffs on steel and aluminum imports. In mid-2025, the US and EU agreed on a trade framework with a 15 percent tariff on most EU goods entering the US, which was a compromise to avert a full-scale trade war.
The development of the trade deal signed appeared to have rattled the US, whose treasury secretary Scott Bessent on Monday doubled down on allegations that India’s oil trade with Russia finances the war in EU-backed Ukraine, suggesting American concern about the strategic implications of this partnership.
Leadership Statements on Historic Achievement
Announcing the trade deal signed, Prime Minister Narendra Modi stated this agreement will bring major opportunities for the public in India and Europe. “This is a perfect example of a partnership between two major economies of the world. This agreement represents 25 percent of the global GDP and one-third of global trade,” he emphasized.
Modi noted that the trade deal signed empowers shared commitment towards democracy and rule of law, adding that “this Free Trade Agreement with the European Union will also complement Britain and EFTA’s agreements.”
EU Commission President Ursula von der Leyen hailed the trade deal signed as making history. “We have concluded the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit,” she declared, adding that this is only the beginning of an even stronger strategic relationship.
The trade deal signed was announced during European Council President Antonio Costa and Von der Leyen’s two-day India visit, during which they served as chief guests at Republic Day celebrations before holding a summit with Prime Minister Modi.
