India and European Union have closed a ‘landmark’ free trade deal, Prime Minister Modi says

India and the European Union on Monday closed a “landmark” free commerce settlement, touted because the “mom of all offers,” Indian Prime Minister Narendra Modi stated throughout a speech on the India Vitality Week on Tuesday.

The FTA with the EU, which represents about 25% of world GDP and a couple of third of world commerce, may even complement India’s offers with Britain and the European Free Commerce Affiliation, Modi stated.

The settlement will forge a market of two billion individuals at a time when commerce ties are being examined amid rising geopolitical tensions.

“I congratulate our colleagues related to each sector, reminiscent of textiles, gems and Jewellery, leather-based and footwear. This deal will show to be very supportive to those sectors,” Modi stated in a speech in Hindi, translated by CNBC.

Modi and EU President Ursula von der Leyen are anticipated to make a joint assertion on the India-EU summit in New Delhi, later within the day, revealing the main points of the deal that had been within the making for practically twenty years.

Commerce talks between the 2 sides have been relaunched in 2022 and the deal has been very long time within the making resulting from “mutually delicate” points reminiscent of agriculture and automotive. “India and European union can each be very protectionist,” Hosuk Lee Makiyama, director of European Centre for Worldwide Political Financial system, instructed CNBC.

Neither the EU nor India have secured a big commerce deal which might affect their financial progress, particularly as U.S. and China are closed off for a deal, so this deal might be “among the best they’ll get,” he stated.

For New Delhi, which has been dealing with the brunt of punitive U.S. tariffs, this deal might be a much-needed shot within the arm. Since Trump imposed 50% tariffs on the Asian financial system in August final yr, it has been different markets for its exports and has entered into commerce offers with a number of international locations.

That is India’s fourth main commerce deal because the U.S., India’s largest export market and a serious buying and selling accomplice, imposed steep tariffs in August. It has entered right into a commerce pact with the U.Okay., Oman and New Zealand.

In keeping with European Fee information, items traded between India and the EU in 2024 amounted to over 120 billion euros (about $140 billion), making the bloc New Delhi’s largest buying and selling accomplice. Equipment and home equipment, chemical compounds, base metals, mineral merchandise and textiles are New Delhi high exports to the bloc. For the yr ended March 2025, India’s items commerce with EU stood at $136 billion.

India is the ninth largest buying and selling accomplice of the EU, accounting for two.4% of the the bloc’s complete commerce in items in 2024, far behind main companions just like the U.S. (17.3%), China (14.6%), or the U.Okay. (10.1%). The EU’s principal exports to India embrace equipment and home equipment, transport gear, and chemical compounds.

European Fee President Ursula von der Leyen stated on the World Financial Discussion board in Davos on Jan. 20 that the bloc was set on “selecting truthful commerce over tariffs. Partnership over isolation. Sustainability over exploitation.”

India’s complete exports to 6 main EU markets — Netherlands, Germany, Italy, Spain, France and Belgium — have been $43.8 billion within the 9 months ending December, in comparison with $65.88 billion for the U.S. alone.

Consultants have stated that though India’s cope with the EU is a serious milestone, it won’t substitute the necessity for an India-U.S. deal.

In 2024, India’s items commerce surplus with the U.S. was $45.8 billion, whereas for the EU it was considerably decrease at $25.8 billion.