India, EU Agree on Mother of all Agreements

New Delhi: After over 18 years of protracted negotiations, India and the European Union agreed on a free trade agreement (FTA), dubbed “the mother of all agreements”, which will be mutually beneficial and give both New Delhi and Brussels a reason to cheer in a world that is getting increasingly unpredictable.

An official announcement about the deal is expected to be made during the 16th India-EU summit on Tuesday between Prime Minister Narendra Modi and European Commission President Ursula von der Leyen.

“Negotiations have been successfully concluded. The deal has been finalised,” commerce secretary Rajesh Agrawal said on Monday.

The deal is expected to be signed this year and may come into effect early next year after securing ratification from the EU Parliament. In India, it requires only the nod of the Union Cabinet.

The pact is expected to open the way for reduced tariffs on European cars. It is likely to provide duty-free access to Indian goods from labour-intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather and footwear.

India is understood to have kept agriculture and dairy out of the purview of the proposed trade deal.

A framework for mobility will also be announced that will benefit groups such as students, researchers and professionals. The two sides are also expected to launch negotiations for a security and classified information pact.

The two sides had first initiated talks for an FTA nearly two decades ago in 2007, but talks had broken down for several years before talks were resumed four years ago.

Speaking about the deal, European Commission president Ursula von der Leyen said that “a successful India makes the world more stable, prosperous and secure, and we all benefit”.

In an FTA, two sides reduce or eliminate import duties on over 90 per cent of goods traded between them. An FTA also liberalises norms to promote trade in services sectors such as telecommunications, transportation, accounting, and auditing.

With a GDP of $20 trillion, the European Union has the second-largest economy after the United States, with a GDP of $31 trillion. China is marginally behind the EU with an economy of $19 trillion. The Indian economy is estimated to be $4 trillion and is one of the major markets after the US and China.

The India-EU deal assumes greater significance in the wake of protectionist measures being taken by the Trump administration in the US and a coercive economic stance of China. It will also reduce India’s dependence on the United States and China for machinery.

Apart from the free trade deal, India and the EU are also negotiating a pact in investment protection and Geographical Indications (GI). The India-EU FTA covers 24 chapters, including trade in goods, services and investment.

India's bilateral trade in goods with the EU was $136.53 billion in 2024-25 (exports worth $75.85 billion and imports worth $60.68 billion), making the EU India's largest goods trading partner. The services trade in 2024 was $83.10 billion. India has a trade surplus of $15.17 billion in 2024-25.