India-EU Historic Free Trade Agreement, Creating Market of Nearly 2 Billion People

India-EU Historic Free Trade Agreement, Creating Market of Nearly 2 Billion People

New Delhi, January 27: India and the European Union on Tuesday announced the successful conclusion of negotiations on a long-pending free trade agreement, marking a major milestone in bilateral relations and global commerce. Prime Minister Narendra Modi described the pact as India’s biggest trade deal to date, calling it a “new blueprint for shared prosperity.”

The agreement, finalised after nearly two decades of negotiations that began in 2007, will see the European Union remove tariffs on 99.5% of Indian exports by value, with most duties dropping to zero as soon as the pact comes into force. India, in turn, has agreed to tariff concessions on 97.5% of the total trade value between the two economies.

The announcement was made during the India-EU Summit at Hyderabad House, where Commerce and Industry Minister Piyush Goyal and European Commissioner for Trade and Economic Security Maroš Šefčovič signed a joint declaration in the presence of Prime Minister Modi, European Commission President Ursula von der Leyen, and European Council President António Costa.

Calling it the “mother of all deals,” von der Leyen said the agreement brings together two of the world’s largest economies in a partnership built on mutual benefit. “We are creating a market of nearly two billion people. At a time of global uncertainty, this sends a powerful message that cooperation remains the best answer to shared challenges,” she said.

With bilateral trade already crossing $136 billion, officials on both sides said the pact ranks among the largest trade agreements globally. The EU currently accounts for about 17% of India’s total exports, making it New Delhi’s largest goods trading partner.

The deal is expected to give a significant boost to labour-intensive sectors such as textiles, leather, marine products, gems and jewellery, many of which will gain zero-duty access to the EU market. Indian services, including IT, professional services and education, will also benefit from improved market access and a new mobility framework for skilled professionals.

Consumers in India are likely to see tangible benefits as well. Import duties on premium European automobiles will be reduced under a calibrated, quota-based system, while tariffs on European wines will fall sharply, making them more affordable in the Indian market.

Beyond trade, the summit also delivered outcomes in strategic areas. India and the EU signed agreements on defence and security cooperation, talent mobility, and green hydrogen, underlining a broader alignment that goes beyond economics.

Commerce Minister Goyal said the agreement could be implemented within the 2026 calendar year after legal vetting. “This is a future-ready pact that will create jobs, drive innovation and strengthen India’s position in global value chains,” he said.

Prime Minister Modi echoed that sentiment, noting that the partnership between India and the EU would contribute to global stability. “This is not just about trade numbers. It is about trust, shared values and shaping a more resilient global order,” he said.

European Council President Costa called the agreement historic, saying it opens a new chapter in India-EU ties spanning trade, security and people-to-people connections. As global trade faces increasing fragmentation, both sides signalled that the deal represents a conscious choice to deepen cooperation in a rapidly changing world.