After nearly 18 years of difficult negotiations, the European Union and India have officially concluded negotiations on a free trade agreement (FTA). This was announced by Indian Prime Minister Narendra Modi at the India-EU summit in New Delhi, calling the deal ‘the mother of all agreements.’
‘This is a perfect example of coordination between two major economies of the world. The agreement covers about 25% of global GDP and almost a third of global trade,’ Modi said.
European Commission President Ursula von der Leyen called the agreement ‘historic, ambitious and commercially significant’ — the largest bilateral trade agreement for both the EU and India. According to her, it creates a single market of nearly 2 billion people and opens up new opportunities for both sides amid global instability.
Key provisions of the agreement
Tariffs on 96.6% of the value of goods exported from the EU to India will be completely or significantly reduced/abolished. This will save European exporters around €4 billion per year.
Complete elimination of duties on aircraft, a significant portion of machinery, chemical products, pharmaceuticals, optics, medical and surgical equipment.
A phased reduction in tariffs on cars, wine and spirits, certain food products and luxury goods.
Sectors that are sensitive for India (agriculture, dairy products, a number of processed products) are largely protected — tariff concessions are minimal or non-existent.
Improved access for Indian companies in the IT, software and professional services sectors to the EU market.
Separate chapters on digital trade, intellectual property, sustainable development (including environmental and social standards), investment facilitation and cooperation in renewable energy and technology supply chains.
The EU expects to double its exports of goods to India by 2032 and strengthen the position of European companies in this fast-growing market.
For India, there will be significant growth in exports of textiles, clothing, leather, jewellery, pharmaceuticals, seafood and other goods to the wealthy EU market (450+ million consumers). Job creation in labour-intensive industries and trade diversification.
The text of the agreement is now undergoing legal review, translation into all official languages and ratification procedures in the European Parliament, the Council of the EU and the Indian Parliament. The process is expected to take 5-8 months. The agreement could enter into force as early as the beginning of 2027, with a phased reduction in tariffs.