India-EU Trade Deal Signed: The ‘Mother of All’ Agreements Draws Global Attention
The long-awaited trade agreement between India and the European Union (EU), branded as the “mother of all deals,” has been officially signed, creating a market of nearly two billion people and representing about a quarter of global GDP.
Commerce Secretary Rajesh Agrawal confirmed on Monday that negotiators from India and the EU successfully concluded an “ambitious, balanced, forward-looking, and mutually beneficial” free trade agreement (FTA). Prime Minister Narendra Modi announced the signing on Tuesday.
The deal comes amid heightened international attention, including scrutiny from the United States. U.S. Treasury Secretary Scott Bessent recently raised concerns about India’s oil trade with Russia, alleging it funds the conflict in Ukraine.
Why the India-EU Trade Deal Matters
Negotiations for the FTA were relaunched in June 2022 after a hiatus of almost nine years. Once implemented, the agreement will cover 25% of the world’s GDP and integrate a market of over 1.9 billion consumers.
The EU is India’s largest trading partner, with goods trade valued at $135 billion in 2023-24. The deal is expected to significantly boost bilateral trade, especially as countries seek to diversify supply chains amid global trade disruptions caused by previous U.S. policies.
According to reports, the pact could allow duty-free access for over 90% of Indian goods in the EU, which includes 27 member states such as Germany, France, Italy, Spain, and Belgium. Key beneficiaries are likely to be labour-intensive sectors like textiles, leather, chemicals, electronics, and jewellery, which face little competition from European manufacturers.
Currently, Indian exporters compete with duty-free and quota-free shipments from least-developed countries like Bangladesh. The FTA is expected to eliminate this disadvantage, opening a more level playing field.
A Strategic Counterweight to Trump-Era Tariffs
The trade deal also serves as a counterweight to former U.S. President Donald Trump’s tariff-heavy policies, which imposed duties of up to 50% on certain Indian imports. Trump’s tariffs also affected steel, aluminum, and oil imports from the EU. A compromise framework in mid-2025 reduced tariffs on most EU goods entering the U.S. to 15%, averting a larger trade conflict.
Prime Minister Modi called the agreement a “perfect example of partnership between two major economies,” highlighting that it covers one-third of global trade. He added that the FTA complements existing agreements with the UK and the European Free Trade Association (EFTA), reinforcing shared commitments to democracy and the rule of law.
EU Commission President Ursula von der Leyen hailed the signing as historic, describing it as the creation of a free trade zone spanning two billion people and emphasizing that “this is only the beginning.”
