New Delhi/Brussels: India and the European Union have finalized a landmark trade agreement, ending a nine-year negotiation hiatus and marking a major pivot in global trade dynamics. Leaders on both sides hailed the pact as a game-changer for commerce and economic ties.
The deal, expected to double EU exports to India by 2032, will eliminate or reduce tariffs on 96.6% of traded goods by value, translating to savings of €4 billion ($4.75 billion) for European companies, according to EU officials.
The EU will cut tariffs on 99.5% of goods over seven years, including immediate zero duties on Indian marine products, leather, textiles, chemicals, rubber, base metals, and gems and jewelry. European automakers including Volkswagen, Renault, Mercedes-Benz, and BMW stand to benefit from India slashing tariffs on cars from as high as 110% to 10% over five years.
Alcoholic beverages are also seeing major tariff reductions: wine tariffs drop from 150% to 75% immediately, gradually lowering to 20%, while spirits will fall to 40%. Machinery, electrical equipment, chemicals, and steel imports from Europe will also become more competitive in India.
People around the world are calling this the mother of all deals, said Indian Prime Minister Narendra Modi, highlighting opportunities for 1.4 billion Indians and millions of Europeans. European Commission President Ursula von der Leyen echoed the sentiment: Europe and India are making history today. This is only the beginning.
Trade between the two economies stood at $136.5 billion in FY2025. Formal signing will follow five to six months of legal vetting, with implementation expected within a year, according to Indian officials.
The deal comes amid a flurry of global trade agreements, including the EU-Mercosur pact and recent deals between India and Britain, New Zealand, and Oman. Experts say the India-EU agreement also serves as a buffer against volatile US trade policies, following the collapse of India-US talks last year.
Ajay Srivastava, former Indian trade official, noted, “This deal boosts India’s exports in labor-intensive sectors and gives European products an immediate price advantage in India, particularly in high-tariff areas like automobiles.”
With this historic pact, India and the EU are signaling a new era of trade cooperation, redefining economic alliances in a shifting global order.