NEW DELHI (Realist English). India and the European Union have concluded what officials described as a “landmark” free trade agreement, a move Prime Minister Narendra Modi said would reshape economic ties between the two sides at a time of mounting geopolitical and trade pressures.
Speaking on Tuesday at India Energy Week, Modi called the accord the “mother of all deals”, noting that the EU and India together account for around 25% of global GDP and roughly one-third of world trade. He said the agreement would complement India’s recent trade pacts with the United Kingdom and the European Free Trade Association, creating a combined market of nearly 2 billion people.
“I congratulate everyone involved across sectors such as textiles, gems and jewellery, leather and footwear,” Modi said. “This deal will be extremely supportive for these industries.”
The agreement was finalised ahead of an India–EU summit taking place on Monday, with detailed provisions expected to be released after the meeting concludes.
For New Delhi, the deal comes as a strategic boost after the United States imposed punitive tariffs on Indian goods last August under President Donald Trump. Since the introduction of 50% tariffs, India has stepped up efforts to diversify export destinations, signing new trade agreements with the UK, Oman and New Zealand.
The EU is already India’s largest trading partner. According to European Commission data, trade in goods between India and the bloc exceeded €120 billion (about $140 billion) in 2024. India’s main exports to the EU include machinery and appliances, chemicals, base metals, mineral products and textiles. The EU, in turn, exports machinery, transport equipment and chemicals to India.
India is currently the EU’s ninth-largest trading partner, accounting for 2.4% of the bloc’s total goods trade, far behind the United States, China and the United Kingdom. Nevertheless, Ursula von der Leyen said at the World Economic Forum in Davos in January that the EU was committed to “choosing fair trade over tariffs, partnership over isolation”.
Despite the scale of the agreement, analysts caution that it will not offset the importance of the US market. In 2024, India recorded a goods trade surplus of $45.8 billion with the United States, compared with $25.8 billion with the EU. Exports to six major EU economies — the Netherlands, Germany, Italy, Spain, France and Belgium — totalled $43.8 billion in the nine months to December, well below exports to the US alone.
Even so, the India–EU agreement is widely seen as a significant milestone, strengthening New Delhi’s position as it navigates an increasingly fragmented global trade environment.
