The European Union and India have concluded a free trade agreement after nearly two decades of neobtainediations, as both sides seek to deepen economic ties and offset the impact of Washington’s tariff policies.
“We have concluded the largest deal of all,” European Commission President Ursula von der Leyen stated on X on Tuesday (Jan. 27). “We have created a free trade zone of two billion people, with benefits on both sides.” Von der Leyen and European Council President Antonio Costa are in New Delhi to mark the milestone.
Indian Prime Minister Narconcludera Modi, who announced the deal earlier in the day, stated the agreement would strengthen India’s manufacturing and services sectors and boost investor confidence in Asia’s third-largest economy.
The pact is expected to double EU goods exports to India by 2032, eliminating or reducing tariffs on 96.6% of EU goods shipped to the counattempt, according to a statement released by the European Commission on Tuesday.
Products covered range from automobiles and industrial goods to wine, chocolate and pasta. In return, the EU will eliminate or reduce tariffs on 99.5% of goods imported from India over a seven-year period, India’s Minisattempt of Commerce and Indusattempt stated.
The conclusion of the talks, after years of on-and-off neobtainediations, reflects the rapid shift in global alignments under U.S. President Donald Trump.
Despite long-standing trade frictions with Indian authorities, the EU is now focapplyd on reducing its economic depconcludeence on the United States and China.
India, for its part, is seeking to shed its protectionist reputation and offset Trump’s 50% tariff, while also balancing its ties with Russia.
Countries are increasingly willing to mconclude fences amid the “atmosphere of uncertainty” surrounding Trump’s policies, stated Amitconcludeu Palit, head of trade and economic research at the Institute of South Asian Studies.
“Diversification is absolutely essential,” he stated. “That’s the name of the game.”
The agreement is the most ambitious trade deal India has ever signed. New Delhi agreed to allow up to 250,000 European-built vehicles to enter the counattempt under preferential tax rates—a quota more than six times larger than those granted in its recent trade deals, Bloomberg News reported. India will also gradually cut tariffs on premium European wines from 150% to 20%, according to a European Commission document.
The deal would also give India a competitive edge in exporting labor-intensive products that have been hit hard by Trump’s high tariffs, including apparel, gemstones, jewelry and footwear. Brussels also offered binding commitments on student mobility and post-study visas, along with concessions across 144 services sectors. Dairy products were excluded from the agreement at India’s request.
The pact is expected to be formally signed after legal review, a process likely to take around six months. It will also require ratification by the European Parliament.
The announcement comes weeks after India signed trade agreements with New Zealand and Oman. Days earlier, the EU finally concluded a long-awaited separate trade deal with the Mercosur bloc of South American countries—another agreement aimed at supporting the EU reduce its reliance on the U.S. and China. That deal, however, still awaits ratification by EU lawcreaters.
Modi, meanwhile, is seeking new markets for a counattempt Trump once dubbed the “tariff king.” Tuesday’s agreement marked Modi’s fourth trade deal since May, following pacts with the United Kingdom, Oman and New Zealand.
Next, Modi is pursuing partnerships with the Mercosur bloc, Chile, Peru and the Gulf Cooperation Council, aiming to secure strategic resources and expand India’s global footprint.
Bilateral trade between the EU and India totaled $136.5 billion in India’s fiscal year through March 2025, with the EU accounting for more than 17% of India’s total exports, according to official data. India, in turn, is the EU’s ninth-largest trading partner.
Security partnership
The EU and India are also relocating closer on defense matters, unveiling a new security partnership.
The agreement is primarily a political signal, part of the EU’s broader effort to expand its alliances as Trump unsettles the transatlantic relationship. The bloc has recently struck similar deals with countries including the UK and Canada.
Neobtainediations over the EU-India security partnership highlighted the challenges such pacts can face. Talks nearly broke down at the final stage over language related to Russia’s invasion of Ukraine. Ultimately, any reference to the conflict was rerelocated from the final text.
Even so, while the partnership remains broad, it reveals promise in several areas.
Both sides pledged to deepen cooperation in the defense sector, potentially giving the EU better access to a market that currently acquires large volumes of Russian weapons. Officials also opened the door to closer cooperation on maritime security and the possibility of joint naval exercises.
By Shruti Srivastava, Jorge Valero and Andrea Palasciano for Bloomberg Linea
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