New Delhi: India and the European Union on Tuesday announced the conclusion of a long-awaited Free Trade Agreement (FTA), marking what Prime Minister Narendra Modi described as a historic milestone and the “mother of all deals” between two of the world’s largest economies. The agreement was unveiled during a joint briefing in New Delhi following high-level talks at Hyderabad House.
Prime Minister Modi earlier held bilateral meetings with President of the European Council Antonio Luís Santos da Costa and President of the European Commission Ursula von der Leyen. The deal comes at a time of global economic uncertainty and trade disruptions triggered by shifting tariff policies of the United States, giving added significance to the India-EU pact.
Calling the agreement a new blueprint for shared prosperity, Modi said the FTA was not limited to trade alone but would deepen cooperation across strategic technology, clean energy, digital governance and development. He said the agreement would open European markets for Indian farmers and industries while strengthening ties in the services sector, adding that cooperation between India and the EU would help reinforce the global economic order.
European Commission President Ursula von der Leyen termed the pact a win-win outcome, stating that the agreement would cut nearly four billion euros in tariffs and integrate supply chains across continents. She said the deal would create millions of jobs on both sides and strengthen cooperation in defence and counter-terrorism, underlining that a successful India would contribute to a more stable and prosperous world.
Echoing similar sentiments, European Council President Costa said the conclusion of the FTA marked a historic day and opened a new chapter in trade, security and people-to-people relations. He said the agreement would effectively create a market of nearly two billion people.
Under the agreement, the European Union will eliminate import duties on 90 per cent of Indian goods from the first day of implementation, which is expected early next year. Duties on an additional three per cent of goods will be phased out over seven years, resulting in tariff concessions on 99.5 per cent of the total trade value in favour of India. Except for sensitive sectors such as automobiles and steel, over 93 per cent of Indian goods will receive zero-duty access to the EU market.
Major Indian sectors expected to benefit include textiles, apparel, marine products, chemicals, plastics, rubber, leather, footwear, gems and jewellery, furniture, toys and sports goods. These sectors currently face EU tariffs ranging up to 26 per cent. The agreement is expected to significantly boost India’s exports, particularly in sectors where duties were previously high, such as marine products and chemicals.
In return, India will provide duty-free access to 93 per cent of EU goods over a ten-year period. On the first day of implementation, India will remove duties on about 30 per cent of European goods, with gradual liberalisation over the next decade. Overall, India will offer tariff concessions on 97.5 per cent of the total trade value to the EU.
Automobiles have been addressed through quota-based duty concessions. India will not reduce duties for mass-market vehicles priced below ₹25 lakh, though European manufacturers may produce such vehicles locally. For high-end vehicles above this threshold, limited duty reductions will apply within specified quotas. Import duties on electric vehicles will see reductions beginning from the fifth year of the agreement, with gradual cuts thereafter.
India has excluded sensitive sectors such as dairy, soya meal and cereals from duty concessions, while the EU has protected its own sugar, meat and poultry sectors. India has, however, secured quota-based duty-free access for table grapes, allowing exports of up to 85,000 tonnes valued at around USD 100 million.
On the services front, the EU has opened 144 sub-sectors to Indian service providers, while India has opened 102 sub-sectors to the EU. The agreement also includes provisions for student mobility and limited post-study work opportunities. Additional chapters cover digital trade, intellectual property rights, sanitary and phytosanitary measures and technical barriers to trade.
Currently, bilateral trade in goods between India and the EU stands at about USD 136 billion and is projected to cross USD 200 billion within three to four years of the agreement’s implementation. Trade in services, estimated at USD 80–85 billion, is also expected to rise sharply, potentially reaching USD 125 billion in the same timeframe.
