India and the EU will implement a free trade agreement that cuts tariffs on key goods and grants duty-free access to most Indian exports. The deal will also link a market of two billion people.
India and the European Union will extend Most Favoured Nation status to each other for five years once their Free Trade Agreement (FTA) takes effect, according to a draft of the deal released on Friday.
The development came almost a month after European Commission President Ursula von der Leyen and European Council President Antonio Costa held marathon meetings with Prime Minister Narendra Modi to shape the final draft of the trade deal during their visit to New Delhi.
On January 27, India and the European Union announced the end of negotiations for their free trade agreement, dubbed the ‘mother of all deals.’ Under the pact, 93 per cent of Indian exports will enter the 27-nation bloc duty-free, while EU luxury cars and wines will face lower import costs.
After nearly two decades of talks, the deal will unite India (the world’s fourth-largest economy) with the EU (the second-largest economic bloc), forming a market of around 2 billion people. Together, they represent 25 per cent of global GDP and roughly one-third of global trade, worth about USD 11 trillion of USD 33 trillion.
The European Union is India’s largest trading partner, with bilateral goods trade reaching USD 135 billion in FY 2023–24. Officials said the proposed free trade agreement could significantly expand commercial ties between the two sides.
Beyond trade volumes, the agreement is expected to transform India-EU relations qualitatively across multiple sectors, particularly as global commerce faces disruption from tariff-driven policies of the United States.
The FTA is taking shape amid rising concerns over US trade measures that have impacted both India and the 27-nation bloc, prompting New Delhi and Brussels to deepen economic cooperation.
India and the EU first began FTA talks in 2007, which were paused in 2013 due to differences over the deal’s scope. Negotiations resumed nearly a decade later, in June 2022.
