EU–India agreement, the “mother of all deals”

“The mother of all deals.” That’s how the free trade agreement between the European Union and India is being described. Nearly two decades after talks first began in 2007, were frozen in 2015 and resumed in 2022, Brussels and New Delhi have sealed a pact that creates a free trade area spanning around two billion people. Together, the two partners account for roughly a quarter of global GDP and close to a third of world trade.

The agreement removes or sharply reduces customs duties on almost all goods traded between the two sides. Between 96 and 99 per cent of bilateral trade is covered, representing just under €180 billion a year. Its scale is economic and geopolitical, arriving only days after the EU signed its long-awaited agreement with the Mercosur countries in Paraguay.

What changes for Europe and India

On the European side, the sectors expected to benefit most include machinery, chemicals, automobiles, wine, olive oil and a wide range of industrial goods. For India, the biggest gains are projected in textiles, gems and jewellery, leather goods and pharmaceuticals. 

The removal of existing tariffs, which currently range from 4 to 26 per cent, will have the strongest impact on India’s labour-intensive sectors, including textiles, leather, footwear, tea, coffee, spices, sporting goods, toys, gems, jewellery and certain seafood products.

Tariffs will also be phased out over three to five years for Indian processed foods, arms and ammunition, with partial reductions for poultry products, preserved vegetables, baked goods, automobiles and steel. For sensitive supply chains, both sides have retained the option of special safeguards, targeted exclusions or gradual market opening.

Much of the upside is expected to come from improved access to services markets. Financial services are among the most affected, alongside IT, professional and maritime services. 

On investment protection, a politically sensitive issue, the agreement introduces clearer standards and stronger safeguards for intellectual property, including copyright, trademarks, designs and trade secrets.

In aggregate terms, the European Commission expects EU exports to India to double by 2032, delivering tariff savings of around €4 billion a year for European companies.

Modi and von der Leyen

“A milestone in relations between New Delhi and Brussels.” That was how Indian prime minister Narendra Modi described the deal, posting first in Italian and then in other European languages on X. 

He thanked European leaders for what he called their constructive spirit over the years, adding that the agreement would deepen economic ties, create opportunities for citizens on both sides and strengthen the India–Europe partnership for a more prosperous future.

Von der Leyen framed the agreement in similarly expansive terms. She hailed it as the mother of all agreements, creating a market of two billion people and linking what she called two giants, the world’s second- and fourth-largest economies.

Cooperation, she said, was the best response to global challenges. The deal would further integrate supply chains, strengthen joint manufacturing capacity, cut up to €4 billion a year in tariffs for exporters of all sizes and support quality jobs for millions of workers in both India and Europe.

Reactions in the European Parliament

The Socialists and Democrats welcomed the agreement as a step that would deepen ties with a key global partner, diversify and strengthen supply chains, bolster strategic autonomy and promote shared prosperity. 

At the same time, the group stressed that the partnership should be matched by strong commitments on democracy, human rights and sustainability.

From the European People’s Party, MEP Mika Aaltola called the deal a strategic necessity at a decisive moment. He argued that closer trade, security and technological cooperation with the world’s largest democracy would reinforce Europe’s long-term autonomy and resilience, describing the agreement as a geopolitical investment in stable supply chains and strategic independence.

Politically, the agreement is considered concluded. Legally, it still requires ratification by the European Parliament, the national parliaments of the EU Member States and India. If that process proceeds smoothly, it could enter into force before the end of the year.