‘Mother of All Deals’: India-EU Trade Agreement Signed, Creates Market of Two Billion People

The long-awaited trade agreement between India and the European Union has been finalised and is being hailed as the “mother of all deals”, with the potential to create a market of nearly two billion people and account for about one-fourth of global GDP.

Commerce Secretary Rajesh Agrawal confirmed on Monday that negotiators from both sides had successfully concluded what he described as an “ambitious, balanced, forward-looking and mutually beneficial” Free Trade Agreement (FTA). Prime Minister Narendra Modi formally announced the signing of the deal on Tuesday.

The development has drawn global attention and appears to have unsettled the United States, with Treasury Secretary Scott Bessent reiterating allegations that India’s oil trade with Russia supports the war in Ukraine.

Why the Deal Matters

Negotiations for the India-EU FTA were relaunched in June 2022 after a nine-year pause. The agreement represents nearly 25 per cent of global GDP and integrates a market of over 1.9 billion consumers.

The European Union is India’s largest trading partner, with bilateral trade in goods reaching $135 billion in 2023–24. The FTA is expected to significantly boost trade at a time when countries are seeking to reduce risks amid global trade disruptions.

Under the agreement, tariffs on over 90 per cent of EU exports to India will be eliminated or reduced, saving European exporters up to €4 billion annually.

Key benefits for the EU include:

• Greater market access and competitive advantage

• Easier entry for service providers in finance and maritime sectors

• Simplified customs procedures

• Stronger protection of intellectual property

• A dedicated chapter for small businesses

Benefits for India

The agreement is expected to benefit labour-intensive sectors such as textiles, leather, chemicals, electronics, and jewellery. It will also help Indian exporters compete with duty-free imports from least-developed countries like Bangladesh.

Once implemented, the FTA is expected to remove the duty disadvantage currently faced by Indian exporters in European markets.

Counterweight to Trump-Era Tariffs

Prime Minister Modi described the agreement as a major opportunity for people in both regions.

“This agreement represents 25 per cent of global GDP and one-third of global trade,” he said, adding that it reflects a shared commitment to democracy and rule of law.

The deal is also seen as a strategic response to tariff-heavy policies pursued by former US President Donald Trump, who had imposed steep duties on Indian and European exports.

Trump previously announced 25 per cent tariffs on Indian goods, along with additional penalties linked to Russian oil imports, and similar levies on EU steel and aluminium.

Global Reactions

European Commission President Ursula von der Leyen welcomed the agreement, calling it historic.

“We have concluded the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit,” she said on X.

She added that the agreement marks the beginning of a stronger strategic partnership between India and the European Union.