After negotiations stretching almost two decades, India has finally inked a far-reaching trade pact with the European Union. Ironically, both sides have Donald Trump’s fickle tariffs to thank for this belated sense of urgency.
It’s not without reason the free trade agreement is spoken of as the ‘mother of all deals’—it not only covers a quarter of the world’s population, but also accounts for a third of global trade. The EU is already India’s largest partner, with trade between the two touching $142 billion in 2024, nearly an eighth of India’s total. The number is poised to surge once the FTA is ratified by both sides, a process that’s likely to take more than a year.
What’s in hand is an agreement to remove or reduce tariffs covering 99 percent of the goods traded between the two. Indian exporters in labour-intensive sectors such as textiles, leather, jewellery and chemicals—who have faced 50 percent duties from the US—will have duty-free access to the 27 EU nations. The EU’s exports to India are expected more than double. Indian elites will benefit from a cut on duties on European cars from 110 percent to 40 percent, and a phased reduction on spirits currently taxed at 100 percent. Tariff cuts on high-end machinery should help local manufacturers.
The EU deal leaves much of the Indian farm sector untouched, a stumbling block in the stalled India-US trade talks. While American corn, soya bean and cotton can pose a threat to Indian farmers, high-value EU agri-products like olive oil, processed meat and cheese would not be as price-competitive.
Negotiations for the India-EU deal, which started in 2007, were called off in 2013-14, only to be resumed in 2022. The increasing US tariff pains pushed them to a rapid conclusion in recent months. The EU’s urgency is also evident in its push to close another deal with the Mercosur bloc comprising four South American nations, which has been in the works for a quarter century. Meanwhile, India signed deals with the UK, Oman and New Zealand in the second half of 2025. This is the way to go. The world is learning that the only way to end the US’s hegemony as the largest market is to forge more regional and multilateral pacts.