India and EU Finalize Major Trade Agreement

Post by : Bianca Suleiman

New Delhi: In a landmark move, India and the European Union have ratified a monumental trade agreement, referred to as the “mother of all deals,” after nearly two decades of discussions. This pact is set to establish a free trade bloc comprising two billion individuals, aimed at bolstering economic relationships.

The signing event, held in New Delhi on Tuesday, saw Prime Minister Narendra Modi alongside European Commission President Ursula von der Leyen and European Council President Antonio Costa. Modi described the agreement as a reflection of around 25 percent of the global GDP and one-third of worldwide trade, creating vast opportunities for citizens from both regions.

Under the agreement, tariffs will be lowered or eliminated on nearly 97 percent of European exports, resulting in savings of up to 4 billion euros ($4.75 billion) annually for the EU. Sectors such as agriculture, automotive, and services are poised to extract first-mover advantages.

Specifically, tariffs on European automobiles entering India will be reduced from 110% to 10%, while wine tariffs will drop from 150% to 20%. Tariffs on processed foods, including pasta and chocolate, will also be abolished. European companies will receive preferential access to India's financial services and maritime sectors.

India anticipates growth in textiles, leather, gems, jewelry, and the service industry. In 2024, bilateral trade in goods reached 120 billion euros ($139 billion), complemented by an additional 60 billion euros ($69 billion) in services trade.

This agreement surfaces as both India and the EU explore new markets in response to US tariffs and Chinese export regulations. The discussions also tackled the facilitation of easier movement for seasonal workers, students, and skilled professionals, along with collaboration in security and defense.

Von der Leyen characterized the deal as “a clear choice for strategic partnership and openness,” highlighting its significance in navigating a fragmented global landscape.

According to the IMF, India is projected to become the fourth-largest economy this year, with the EU identifying India as an essential market for investment and technology.