India and EU Finalize Major Free Trade Agreement After Two Decades

Prime Minister Narendra Modi said Tuesday that India and the European Union have reached a free trade agreement to deepen their economic and strategic ties. The accord, covering nearly two billion people, was concluded after almost 20 years of negotiations and has been called the “mother of all deals” by both sides. Analysts say it ranks among the largest bilateral trade agreements in history.

Speaking virtually at an energy conference, Modi said the pact represents 25 percent of global GDP and one-third of world trade. “This agreement will bring major opportunities for the people of India and Europe,” he said. The announcement comes as both India and the EU face rising tariffs from the United States, which have disrupted established trade flows and pushed major economies to explore alternative partnerships.

Modi was scheduled to meet European Commission President Ursula von der Leyen later Tuesday to formally announce the agreement. Indian officials said the deal will help the country diversify its export destinations, offsetting the impact of US tariffs. Washington recently imposed an additional 25 percent levy on Indian goods in response to India’s ongoing purchases of discounted Russian oil, bringing total US tariffs to 50 percent.

For the European Union, the agreement opens wider access to one of the fastest-growing major economies in the world. It is expected to benefit European exporters and investors by reducing dependence on markets that have become increasingly volatile. Bilateral trade between India and the EU stood at $136.5 billion in 2024-25. Trade Ministry officials in India said both sides hope to raise this to around $200 billion by 2030.

“Ultimately, the agreement is about creating a stable commercial corridor between two major markets at a time the global trading system is fragmenting,” said Indian trade analyst Ajay Srivastava.

The deal also reflects broader shifts in EU foreign policy. Relations with the United States have been strained by higher tariffs, political disagreements, and diplomatic tensions. European leaders have intensified engagement with markets around the world, signing agreements with Japan, Indonesia, Mexico, and countries in South America over the past year under the banner of “strategic autonomy.”

Von der Leyen, who arrived in India on Sunday, said the agreement sends a wider message. “We are showing a fractured world that another way is possible,” she posted on X, highlighting the EU’s commitment to building independent and stable trade partnerships beyond traditional alliances.

The India-EU free trade deal is expected to reshape commercial ties in the coming decade, offering new opportunities for exporters, investors, and consumers on both sides. Observers say it signals a shift toward a more multipolar global trading system, where large economies seek alternatives to traditional trade partners in response to rising protectionism.