India and the European Union have announced a landmark trade agreement, ending nearly 20 years of intermittent negotiations as both parties strive to deepen economic ties amid escalating global trade tensions.
“This is the mother of all deals,” stated Ursula von der Leyen at a briefing in Delhi, while Narendra Modi hailed the pact as “historic”.
The agreement will facilitate the free trade of goods between the EU’s 27 member states and the world’s most populous country, collectively accounting for nearly 25% of global GDP and a combined market of approximately two billion people. The deal is anticipated to significantly reduce tariffs, enhance market access, and strengthen supply-chain integration on both sides.
Von der Leyen and António Costa were in Delhi for a bilateral summit with Modi, where the agreement was finalised ahead of formal approval later this year by the European Parliament and the European Council.
Under the agreement, tariffs will be eliminated or gradually reduced on most EU exports of chemicals, machinery, and electrical equipment, as well as aircraft and spacecraft. Importantly for European carmakers, duties on motor vehicles, currently up to 110%, will be cut to 10% under a quota of 250,000 vehicles. This quota is six times larger than the 37,000-unit allowance granted to the UK under its trade deal with India signed last July.
For India, the deal will provide “preferential access” to the EU for almost all exports, with textiles, leather goods, marine products, handicrafts, gems, and jewellery among the primary beneficiaries. Tariffs will also be reduced or removed on commodities such as tea, coffee, spices, and processed foods, although Delhi has protected sensitive sectors including dairy, cereals, poultry, soy meal, and certain fruits and vegetables.
Both parties stated that the agreement would boost investment flows, deepen manufacturing and services links, and improve access for small businesses. A parallel mobility framework will ease short-term travel restrictions for professionals moving between India and the EU.
“This is India’s biggest free trade agreement,” Modi said. “It will make access to European markets easier for our farmers and small businesses, boost manufacturing and services, and strengthen innovative partnerships.”
The deal comes amid a tense geopolitical backdrop. India is still contending with 50% tariffs imposed by Donald Trump last year, while discussions on a US–India trade deal continue to stall. The EU has also faced pressure from Washington, including recent threats over Greenland, before the US president relented.
Von der Leyen characterised the agreement as a strategic response to these pressures. “This is the tale of two giants, the world’s second and fourth largest economies, choosing partnership in a true win-win fashion,” she said, describing it as a “strong message that cooperation is the best answer to global challenges”.
Costa added that the deal sent an “important political message” at a time when protectionism is rising and “some countries have decided to increase tariffs”.
Beyond trade, India and the EU are also advancing discussions on security, defence, and climate cooperation. India’s defence minister, Rajnath Singh, stated that talks with Kaja Kallas covered defence supply chains, maritime security, and cyber threats. A draft security and defence partnership is now in development.
The EU is already India’s largest trading partner in goods, with bilateral merchandise trade reaching $136bn (£99.4bn) in 2024–25 — nearly double the level of a decade ago. Negotiations for a free trade agreement first began in 2007 but stalled in 2013 over market access and regulatory issues, before formally resuming in July 2022.
The breakthrough comes as both Delhi and Brussels seek to secure alternative markets for exporters. India has signed major trade agreements in recent years with the UK, Australia, Oman, and New Zealand, while a pact with the European Free Trade Association came into force last year. The EU, meanwhile, concluded a long-awaited trade deal with Mercosur earlier this month after 25 years of negotiations.
Formal signing of the India–EU agreement is expected later this year, once the legislative approval process on the European side is complete.
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