Indian Prime Minister Narendra Modi (middle) welcomes European Council President Antonio Costa (left) and European Fee President Ursula von der Leyen earlier than their assembly in New Delhi, India, Tuesday.
Manish Swarup/AP
cover caption
toggle caption
Manish Swarup/AP
NEW DELHI — After practically 20 years of negotiations, India and the European Union introduced Tuesday they’ve reached a free commerce settlement to deepen financial and strategic ties. The accord, which the EU chief described because the “mom of all offers,” might have an effect on as many as 2 billion individuals.
The deal between two of the world’s greatest markets comes as Washington targets each India and the EU with steep import tariffs, disrupting established commerce flows and pushing main economies to hunt alternate partnerships.
“This settlement will carry main alternatives for the individuals of India and Europe,” India’s Prime Minister Narendra Modi stated in a digital deal with to an power convention. “It represents 25% of the worldwide GDP and one-third of world commerce.”
The accord will see free commerce on virtually all items between the 27 members of the EU and India, overlaying every little thing from textiles to medicines and bringing down excessive import taxes for European wine and vehicles.
India and the EU additionally agreed on a framework for deeper protection and safety cooperation, and a separate pact aimed toward easing mobility for expert staff and college students, signaling their partnership extends past commerce.
U.S. strain propels India-EU commerce deal
The negotiations for the India-EU deal acquired a brand new impetus after U.S. President Donald Trump’s strong-arm commerce ways, together with threatening his European allies with punitive tariffs over their objections to Trump’s try to take management of Greenland.
Talking at a joint information convention in New Delhi with European Fee President Ursula von der Leyen and European Council President António Costa, the Indian chief stated the partnership with the EU “will strengthen stability within the worldwide system” at a time of “turmoil within the international order.”
“Europe and India are making historical past immediately. We now have concluded the mom of all offers,” von der Leyen stated in a publish on X.
In a speech later, she stated the accord was a story of “two giants” who selected partnership “in a real win-win vogue.” She additionally stated it sends “a powerful message that cooperation is one of the best reply to international challenges.”
The deal is anticipated to additional combine provide chains and strengthen joint manufacturing energy between the 2 economies. It’s going to additionally reduce as much as 4 billion euros ($4.7 billion) in annual tariffs for exporters and create jobs for hundreds of thousands of staff in India and in Europe.
Deal to chop tariffs and ease regulatory limitations
A proper signing of the deal might come later this yr after officers undergo the authorized particulars of the textual content and the EU Parliament ratifies it. The Indian Commerce Minister, Piyush Goyal, stated he anticipated the deal to come back into power by the top of the yr.
India is anticipated to cut back or remove tariffs for 96.6% of EU exports, whereas Brussels will reciprocate with related reductions in phases that finally cowl practically 99% of India’s shipments by commerce worth, based on statements from either side.
India’s sectors poised to realize from the deal embody textiles, attire, engineering items, leather-based, handicraft, footwear and marine merchandise whereas the EU’s positive aspects shall be in wine, vehicles, chemical substances and prescribed drugs, amongst others.
A quota system for vehicles, wines and whisky has been agreed on, bringing down steep duties.
The European Fee stated tariffs charged by India on EU-made vehicles will steadily go down from 110% to as little as 10%, whereas they are going to be absolutely abolished for automotive elements after 5-10 years. Tariffs ranging as much as 44% on equipment, 22% on chemical substances and 11% on prescribed drugs may even be largely eradicated.
On European wine, the tariffs in India would come down from 150% to twenty% for premium wines.
New Delhi has excluded from the deal dairy merchandise similar to milk and cheese together with cereals, citing “home sensitivities” about these merchandise. The EU for its half will not permit concessional tariffs on imports of Indian sugar, meat, poultry and beef merchandise, officers at Indian Commerce Ministry stated.
Offsetting affect of upper U.S. tariffs
India is seeking to diversify its export locations as a part of a technique to offset the affect of upper U.S. tariffs, together with an additional 25% levy on Indian items for its unabated purchases of discounted Russian oil, bringing the mixed tariffs imposed by the USA on its Asian ally to 50%.
For the EU, the deal gives the bloc expanded entry to one of many world’s fastest-growing main economies, and helps European exporters and buyers cut back their reliance on extra risky markets.
Commerce between India and EU stood at $136.5 billion in 2024 to 2025. The 2 sides hope to extend that to about $200 billion by 2030, Indian officers stated.
“Finally, the settlement is about making a secure business hall between two main markets at a time the worldwide buying and selling system is fragmenting,” stated Indian commerce analyst Ajay Srivastava.
The EU continues to be reeling from the aggressive strategy of its once-stalwart ally throughout the Atlantic. There is a widespread sense of betrayal throughout the 27-nation bloc from Trump’s onslaught of upper tariffs, embrace of far-right events, and belligerence over Greenland, a semiautonomous territory of Denmark.
Brussels has accelerated its outreach to markets around the globe. Over the previous yr, von der Leyen has signed offers with Japan, Indonesia, Mexico, and South America underneath the catchphrase “strategic autonomy,” which in follow is akin to decoupling from a U.S. seen by most European leaders as erratic.
