India and the European Union officially announced on Tuesday the conclusion of the largest bilateral trade agreement in history — the so-called “mother of all deals” — covering a market of two billion people. The agreement, which has been in the works for more than 20 years, aims to reduce tariffs, stimulate trade and strengthen strategic partnerships amid competition with the US and China.
Indian Prime Minister Narendra Modi and EU leaders expressed confidence that the deal would open up new opportunities for both sides. According to a statement by the 27-nation bloc, tariffs on nearly 97% of European exports will be reduced or eliminated, saving up to €4 billion annually.
“This deal opens up many opportunities for India’s 1.4 billion people and millions of EU citizens,” Modi said after meeting with European Commission President Ursula von der Leyen and European Council President António Costa in New Delhi. According to him, the agreement covers about 25% of global GDP and a third of world trade.
The EU sees India as a key market for the future. “Today, Europe and India are making history. We have created a free trade area for two billion people, which will benefit both sides,” von der Leyen said, stressing that the agreement will give European companies a “first-mover advantage” in the Indian market.
The agreement provides for a gradual reduction in tariffs on cars from 110% to 10%, on wine from 150% to 20%, and tariffs on processed foods, including pasta and chocolate, will be completely abolished. Access to the financial services and maritime transport markets is also expected to be simplified.
For India, the deal will stimulate the development of the textile industry, the production of precious stones and jewellery, leather goods and the service sector. According to EU data, bilateral trade in goods reached €120 billion in 2024, while trade in services amounted to another €60 billion.
The conclusion of the agreement coincided with efforts by both sides to diversify foreign trade: India is gradually reducing its dependence on Russia for arms supplies, while Europe is seeking new opportunities outside the influence of the US. It is expected that in the future, the countries will also sign agreements on the movement of seasonal workers, students and researchers, as well as on security and defence.
