EU and India Conclude Historic Trade Agreement After Nearly Two Decades
The European Union has successfully concluded trade negotiations with India this morning, marking a significant milestone in international economic relations. Alongside the comprehensive trade accord, both parties have signed several separate agreements covering mobility, security, and defence cooperation.
Market Access and Tariff Reductions
The landmark agreement will substantially open up India's traditionally protected market to European goods and services. According to Reuters reports, New Delhi has committed to reducing tariffs on imported cars from as high as 110% down to 10% over a five-year implementation period.
The European Union has confirmed that the deal will also significantly cut tariffs on a wide range of EU exports to India, including:
- Machinery and industrial equipment
- Electrical goods and components
- Chemical products
- Iron and steel products
Economic Significance and Job Creation
EU officials have emphasised that the trading relationship between the European Union and India already represents over €180 billion in annual goods and services exchange. This substantial economic activity currently supports approximately 800,000 jobs within the European Union.
The European Commission projects that goods exports from the EU to India are expected to double by 2032 as a direct result of this new agreement. The bloc has described this as "the most ambitious trade opening that India has ever granted to a trade partner", creating a combined market of more than 2 billion consumers.
Political Significance and Statements
Indian Prime Minister Narendra Modi welcomed the historic agreement, stating that "the two largest democratic powers of the world are adding a decisive chapter to their relations". He characterised the agreement as India's largest ever free trade deal in its history.
European Commission President Ursula von der Leyen went even further in her assessment, famously describing the agreement as "the mother of all trade deals" during the announcement ceremony at Hyderabad House in New Delhi.
Geopolitical Context and Timing
The agreement comes after an extraordinary 19 years of negotiations between the two economic powers. The timing is particularly significant as the European Union actively seeks to diversify its trade partnerships amid increasingly uncertain relations with the United States under former President Donald Trump's tariff-focused policies.
This development follows closely on the heels of another major EU trade agreement signed earlier this month with the South American Mercosur bloc, which itself required 25 years of negotiations.
Ratification Process and Future Implications
The comprehensive agreements will now proceed through the standard ratification processes, requiring approval from European Union member states and the European Parliament before full implementation can begin.
European Council President António Costa, who holds overseas citizenship of India through his Goan heritage, highlighted the broader significance of the agreement, stating that it "sends a clear message to the world at a time when the global order is being fundamentally reshaped".
The successful conclusion of these negotiations represents a major strategic achievement for both the European Union and India as they strengthen economic ties and position themselves within an evolving global economic landscape.
