India and the European Union have finalised a long-awaited landmark trade agreement, Prime Minister Narendra Modi announced on Tuesday, marking a major step in economic ties between the two partners as both seek to reduce reliance on an increasingly unpredictable United States.
After nearly two decades of stop-start negotiations, the deal will open India’s vast but traditionally protected market to freer trade with the 27-nation European bloc, its largest trading partner.
“Yesterday, a major agreement was signed between the European Union and India,” Modi said, describing it as what many around the world are calling “the mother of all deals”.
“This agreement will create significant opportunities for the 1.4 billion people of India and the millions of people in Europe,” he added.
Modi and European Commission President Ursula von der Leyen are expected to formally unveil the details at an India-EU summit in New Delhi later on Tuesday.
Trade between India and the EU reached $136.5 billion in the fiscal year ending March 2025. While the agreement has been finalised, its formal signing will follow a legal vetting process expected to take five to six months. Implementation is likely within a year, according to an Indian government official familiar with the matter.
Wave of global trade pacts
The India-EU agreement comes amid a flurry of trade deals worldwide. Just days ago, the EU concluded a pivotal pact with the South American bloc Mercosur, following agreements last year with Indonesia, Mexico and Switzerland.
India, too, has been active on the trade front, recently finalising deals with Britain, New Zealand and Oman.
This surge in agreements reflects a broader effort by countries to hedge against trade uncertainties linked to the United States. President Donald Trump’s renewed tariff threats against European nations, along with his controversial bid to take over Greenland, have strained traditional alliances.
An India-US trade deal collapsed last year after talks broke down, while negotiations between India and the EU were revived in 2022 following a nine-year pause. Momentum picked up after the US imposed tariffs on several partners, including a 50 per cent levy on Indian goods.
For India, the agreement is expected to boost exports from labour-intensive sectors, helping to offset the impact of US tariffs, said Ajay Srivastava, a former Indian trade official.
He added that European products would gain an immediate price advantage in India due to tariff reductions, particularly in sectors such as automobiles, where duties can be as high as 110 per cent.