NEW DELHI: Prime Minister Narendra Modi announced that India and the European Union (EU) agreed on the Free Trade Agreement (FTA), assuring that the ‘mother of all deals’ will bring major opportunities for both sides.
The EU is currently India’s largest trading partner in goods, accounting for about 17% of India's total exports. The agreement is projected to drive a more than 50% jump in India’s exports to the region over the next five years.
“People are calling this the mother of all deals. This agreement will bring major opportunities for the public in India and Europe. This is a perfect example of a partnership between two major economies of the world. This agreement represents approximately 25% of global GDP and about one-third of global trade,” said Modi during his address on this newly signed FTA.
The PM further assured that this deal will be a major boost to the Indian manufacturing sector. The FTA is likely to provide duty-free access to a number of Indian goods from labour-intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather, and footwear. The pact also liberalises norms to promote trade in services sectors such as telecommunications, transportation, accounting, and auditing.
A report by Emkay Global Financial Services estimated that the pact could lift India’s exports to the EU by as much as USD 50 billion by 2031. India's trade with EU currently stand at exports worth USD 75.85 billion and imports of USD 60.68 billion.
The deal was finalised in the presence of European Council President António Costa and European Commission President Ursula von der Leyen, both of whom had attended the 77th Republic Day celebrations at the Kartavya Path as chief guests.
The FTA was formally announced before an India-EU summit on Tuesday. Alongside the pact, both sides will also unveil a defence framework agreement and a broader strategic agendato navigate the geopolitical flux triggered by Washington's policies on trade and security.
The talks for the India-EU FTA began in 2007, but were suspended in 2013 as both sides opted for certain protectionist measures. The negotiations were relaunched in June, 2022, and came to fruition on January 27, 2026.
A formal signing is likely later this year after the text clears legal scrutiny.
Soon after the conclusion of the FTA was announced, the United States accused Europe of indirectly financing the Russia-Ukraine war through its expanding trade ties with India.
US Treasury Secretary Scott Bessent said Europe may have reduced its direct energy imports from Russia, but continues to purchase refined oil products originating from Russian crude processed in India.