India-EU Trade Deal: Modi Hails ‘Landmark’ Agreement

India and the European Union have finalized a landmark free trade agreement, described by Indian Prime Minister Narendra Modi as the “mother of all deals.” The agreement, representing approximately 25% of global GDP and a third of global trade, aims to forge a market of 2 billion people amid increasing geopolitical tensions.

India-EU Free Trade Agreement Reached

The deal will complement India’s existing trade agreements with Britain and the European Free Trade Association, Modi said during a speech at India Energy Week on Tuesday. He specifically highlighted the positive impact the agreement will have on sectors like textiles, gems and jewelry, leather, and shoes.

A joint statement detailing the agreement is expected from Modi and EU President Ursula von der Leyen at the India-EU summit in New Delhi later Tuesday. Trade talks between the two sides were relaunched in 2022 after being stalled for nearly two decades due to “mutually sensitive” issues, including agriculture and automotive.

Experts note that securing a significant trade deal is crucial for both India and the EU, particularly as opportunities with the U.S. and China are limited. Hosuk Lee Makiyama, director of the European Centre for International Political Economy, stated this deal represents “one of the best they can get.”

For New Delhi, the agreement provides a needed boost as it faces U.S. tariffs imposed last August. Since then, India has sought alternative markets and entered into trade deals with the U.K., Oman, and New Zealand. This is India’s fourth major trade deal since the imposition of those tariffs.

In 2024, goods traded between India and the EU amounted to over 120 billion euros (approximately $140 billion), making the EU New Delhi’s largest trading partner. India’s top exports to the bloc include machinery and appliances, chemicals, base metals, mineral products, and textiles. Total India-goods trade stood at $136 billion for the year ending March 2025.

India currently represents 2.4% of the EU’s total trade in goods, lagging behind major partners like the U.S. (17.3%), China (14.6%), and the U.K. (10.1%). The EU primarily exports machinery and appliances, transport equipment, and chemicals to India.

European Commission President Ursula von der Leyen, speaking at the World Economic Forum in Davos on January 20, emphasized the bloc’s commitment to “choosing fair trade over tariffs. Partnership over isolation. Sustainability over exploitation.”

India’s exports to six major EU markets – Netherlands, Germany, Italy, Spain, France, and Belgium – totaled $43.8 billion in the nine months ending December, compared to $65.88 billion for the U.S. alone. Despite the significance of the EU deal, experts believe it will not negate the need for a trade agreement with the U.S.

In 2024, India had a goods trade surplus of $45.8 billion with the U.S., substantially higher than the $25.8 billion surplus with the EU.