India, EU finalise landmark trade deal, PM Modi says

Modi hails agreement after years of talks as both sides seek alternatives to US-led trade ties

India and the European Union have finalised a landmark trade deal, Indian Prime Minister Narendra Modi said on Tuesday, as the two sides seek to hedge against fickle ties with the U.S.

After nearly two decades of on-and-off negotiations, the deal will pave the way for India to open up its vast and guarded market, the world's most populous, to free trade with the 27-nation EU, its biggest trading partner.

“We are on the cusp of a historic trade agreement,” European Commission President Ursula von der Leyen said this week.

"Yesterday, a big agreement was signed between the European Union and India," Modi said.

"People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe," he said.

Under the deal, tariffs on more than 90% of EU goods exports to India will be eliminated or reduced, marking one of the most extensive tariff liberalisation commitments India has undertaken in a bilateral trade pact.

As part of the agreement, tariffs on European cars exported to India will be gradually lowered to 10%, subject to an annual quota of 250,000 vehicles. The deal also grants EU service providers privileged access to the Indian market in key sectors, including financial and maritime services, enhancing opportunities for European firms in India’s growing services economy.

Tariffs on almost all EU chemical products and 90% of optical, medical and surgical equipment will be eliminated, while duties on most aircraft and spacecraft exports will also be removed.

The agreement will largely scrap existing tariffs of up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals, measures the EU says could help double its exports to India by 2032.

European exporters are expected to save up to €4 billion annually in duties on EU products sold in India. 

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Modi and European Commission President Ursula von der Leyen are expected to make a joint announcement at an India–EU summit in New Delhi, along with the details of the deal, later on Tuesday.

Trade between India and the EU stood at $136.5 billion in the fiscal year through March 2025.

The agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.

During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.

The spate of deals underscores global efforts to hedge against the United States as President Donald Trump's bid to take over Greenland and tariff threats on European nations test longstanding alliances among Western nations.

Trump has imposed a 50% tariff on goods from India, and an India-U.S. trade deal collapsed last year after a breakdown in communication between the two governments.

The formal signing of the India-EU deal would take place after legal vetting, expected to last five to six months, an Indian government official aware of the matter has said.

"We expect the deal to be implemented within a year," the official added.