India and the European Union have finalized a trade deal at a summit in New Delhi. European Commission President Ursula von der Leyen described the agreement as “the mother of all deals.”
Indian Prime Minister Narendra Modi announced the finalization of the agreement in a televised address on Tuesday. He said the deal will boost innovation and enhance cooperation between the South Asian nation and the European bloc.
EU chief von der Leyen said the pact would create a free trade zone of 2 billion people, benefiting both India and the bloc.
“This agreement will bring major opportunities to 1.4 billion people of India and millions in Europe,” Modi said. “This is a perfect example of a partnership between two major economies of the world,” he added.
“India is the world’s fastest growing major economy,” European Council President Antonio Costa said. “The trade agreement reinforces a rule-based economic order.”
He added that the summit sends a clear message that “in a reshaping global order, the EU and India stand together as strategic, reliable partners.”
The deal is expected to cut duties on over 90% of EU goods to India and could save member nations up to €4 billion ($4.75 billion) in taxes, Mint reported. The pact is also expected to double EU exports to India.
New Delhi will slash tariffs on cars to 10% over five years from as high as 110%, The Guardian said, citing an EU statement.
Tariffs will be slashed on 99.5% of goods traded by the trade bloc over seven years, Reuters reported.
India’s Commerce Ministry said the EU will eliminate tariffs on marine goods, leather and textile products, chemicals, rubber, base metals, gems, and jewelry.
Commerce Minister Piyush Goyal called the deal a “formidable partnership” for both sides, adding in a post on X that it would result in export growth to the tune of $76 billion from Indian states to the EU.
India has repeatedly raised objections to what it sees as non-tariff barriers imposed by the EU, particularly carbon-related levies affecting steel, aluminium, and cement exports. The trade deal will enable India to have flexibility on carbon tax, according to reports.
EU exports to India include machinery, transport equipment, and chemicals. The bloc imports machinery, chemicals, base metals, mineral products, and textiles from India.
Bilateral trade between India and the EU reached approximately $136 billion in 2024-25. This makes the bloc India’s largest goods trading partner, according to official data.
The EU and India also signed a security and defense partnership. The 17th India-EU Summit will be held in Brussels next year.