India and the European Union have finalised a wide-ranging trade agreement, Prime Minister Narendra Modi announced on Tuesday, marking a major step in economic cooperation between the two sides. After nearly two decades of intermittent negotiations, the deal will allow India to gradually open its large and traditionally protected market to free trade with the 27-member European Union, its biggest trading partner.
Speaking publicly, Modi described the agreement as a historic achievement. He said the deal would create significant opportunities for India’s 1.4 billion people and millions across Europe.
Meanwhile, Modi and European Commission President Ursula von der Leyen are expected to formally unveil the agreement and its key provisions at an India-EU summit in New Delhi later on Tuesday.
Trade between India and the EU reached $136.5 billion in the fiscal year ending March 2025, underlining the scale of the economic relationship. However, officials noted that the formal signing would follow a legal vetting process expected to take five to six months. Consequently, implementation is likely within a year.
Global shifts shape trade strategy
The agreement comes amid a flurry of global trade deals as countries seek to reduce reliance on the United States. Recently, the EU concluded a major pact with the South American bloc Mercosur and earlier signed agreements with Indonesia, Mexico, and Switzerland. At the same time, India finalised trade deals with Britain, New Zealand, and Oman.
Analysts say shifting US trade policies, including tariff threats under President Donald Trump, accelerated negotiations. Talks between India and the EU resumed in 2022 after a nine-year pause and gained pace following new US tariffs, including a 50 percent levy on Indian goods.
Former trade official Ajay Srivastava said the deal would boost India’s labour-intensive exports while offering EU products price advantages through reduced Indian tariffs.
