India and EU Forge Landmark Trade Agreement

New Delhi: In a significant milestone, India and the European Union have finalized a landmark trade agreement, dubbed the “mother of all deals,” after nearly two decades of negotiations. This agreement aims to establish a free trade market for two billion people and enhance economic cooperation.

The announcement was made by Prime Minister Narendra Modi alongside European Commission President Ursula von der Leyen and European Council President Antonio Costa in New Delhi on Tuesday. Modi stated that this pact “accounts for about 25 percent of global GDP and one-third of global trade,” promising new opportunities for both Indian and European citizens.

The agreement will reduce tariffs on nearly 97 percent of European exports, projecting savings of up to 4 billion euros ($4.75 billion) annually for the EU. Key sectors in Europe, such as agriculture, automotive, and services, will notably benefit from this arrangement.

Import tariffs on European cars in India will decline from 110% to 10%, while wine tariffs will drop from 150% to 20%. Additionally, tariffs on processed foods like pasta and chocolate will be eliminated. European companies will also gain preferential access to India's financial services and maritime sectors.

India anticipates growth in industries such as textiles, leather, and jewelry, as well as the service sector. In 2024, bilateral trade in goods reached 120 billion euros ($139 billion), complemented by 60 billion euros ($69 billion) in services trade.

This agreement comes as both India and the EU seek new markets in light of increasing US tariffs and Chinese export controls. Discussions included provisions for easier movement for seasonal workers, students, and skilled professionals, as well as collaborations on security and defense.

Von der Leyen emphasized that this deal illustrates a strategic partnership and a pathway to prosperity in a divided world.

According to the IMF, India is set to emerge as the fourth-largest economy this year, with the EU identifying India as a vital investment and technology partner.