On January 27, the European Union and India announced a historic trade agreement, the largest ever for both parties involved. Negotiations for the Free Trade Agreement (FTA) ended today after almost two decades of talks. The agreement creates a free trade area of 2 billion people, sending a signal to the world that rules-based cooperation brings remarkable results, according to European Commission President Ursula von der Leyen. The historic deal comes at a time of rising geopolitical tensions and global economic challenges as the US continues its tariff war against several nations. Von der Leyen called the event «the mother of all agreements» during a press conference in Delhi, while Indian Prime Minister Narendra Modi emphasized that the pact was historic.
India and the EU are strengthening economic and political ties
The recently announced agreement highlights the countries' commitment to economic openness and rules-based trade. The EU and India already exchange goods and services worth over €180 million per year, supporting over 800,000 jobs in the EU. The agreement is expected to double EU exports of goods to India by 2032 by eliminating or reducing tariffs by almost 100%. Tariff reductions could save 4 billion euros annually in customs duties on European products. Official EU reports say this is the most ambitious trade opening India has ever granted to a trading partner, giving the EU access to the world's most populous country. India is among the most dynamic large economies with an annual GDP of over 3.4 trillion euros.
Key points on the India-EU deal
Highlights of the EU-India trade deal include the following: New opportunities for European businesses of all sizes – Tariff reductions of up to 100% will be applied to cars, and other duties on cars, chemicals and pharmaceuticals will also be eliminated. Benefits for SMEs in both countries – Small and medium-sized enterprises will benefit from tariff reductions, removal of regulatory barriers, transparency, stability and predictability. Tariff reduction for agri-food products – The free trade agreement reduces tariffs for EU agri-food exports, supporting European farmers; EU agricultural sectors will be fully protected and all Indian imports will comply with strict EU food health and safety rules; European agricultural products will sell better in India after negotiations in a separate agreement. Access for European companies to the Indian services market and protection of intellectual property – EU companies will have privileged access to key sectors in India such as financial services and shipping; the agreement provides a high level of intellectual property protection for businesses in both countries. Enhanced Sustainability Commitments – The Agreement promotes environmental protection, workers' rights and women's empowerment; €500 million in EU support will help India accelerate sustainable industrial transformation.
EC President Ursula von der Leyen and Indian Prime Minister Narendra Modi
What's next
The negotiated texts will soon be published by the EU and will undergo a legal review and translation into all Union languages. The EU and India can sign all agreements after they are adopted by the Council. Once signed, the Free Trade Agreement requires the consent of the European Parliament and the Council's decision on its conclusion in order to enter into force. After India also ratifies the agreement, it will be able to enter into force, according to the European Council. The EU and India first launched negotiations for a free trade agreement in 2007, and talks were suspended in 2013 and resumed in 2022. India and the EU are actively working to strengthen relations, and the countries are looking to diversify away from the US amid tariff threats from Trump. EU countries will benefit from the new free trade agreement with India, which aims to support business development, improve market access, protect sensitive sectors and potentially boost regional GDP in the coming years. Join our 33,000+ subscribers. No spam, just useful info.