After nearly two decades of negotiations, the European Union and India have finalized a landmark free trade agreement, signaling a concerted effort to diversify economic partnerships amid global uncertainty [[1]]. The agreement, lauded by Indian Prime minister Narendra Modi as “the mother of all agreements,” aims to foster economic growth for both regions – representing a combined population of two billion and 25% of global GDP [[2]] – and comes as both sides navigate shifting geopolitical landscapes and a desire to lessen reliance on the United States [[3]].
The European Union and India have reached a landmark trade agreement after nearly two decades of negotiations, a move signaling a broader effort to diversify economic partnerships amid increasing global uncertainty. Both sides are seeking to reduce reliance on the United States as a key economic partner.
“Yesterday, a major agreement between the EU and India was signed,” said Indian Prime Minister Narendra Modi.
“People around the world see this agreement as the mother of all agreements. The deal will create huge opportunities for India’s 1.4 billion people and for all the millions of people in Europe,” Modi continued.
The EU Commission announced the agreement in a press release Tuesday.
India is the world’s most populous nation and is poised to become the fourth-largest economy globally, according to projections from the International Monetary Fund (IMF).
EU President Antonio Costa, Indian Prime Minister Narendra Modi, and European Commission President Ursula von der Leyen met in New Delhi, where the agreement was signed.
Foto: Altaf Hussain / Reuters / NTB
The trade agreement will open India’s vast and protected market to free trade with the 27 EU member states, representing its largest trading partner. According to Modi, the agreement represents 25 percent of the world’s gross national product and one-third of global trade.
The deal will eliminate or reduce tariffs on almost 97 percent of EU exports to India, resulting in annual savings of 4 billion euros, the EU stated. The agreement is expected to particularly benefit the EU’s key agricultural, automotive, and service sectors.
“Europe and India are making history today. We have finalized the mother of all agreements. We have created a free trade zone with two billion people, which will benefit both sides. This is just the beginning. Our strategic relationship will be built and become even stronger,” said von der Leyen in a statement on X.
India is expected to ease market access for key European products. Import tariffs on automobiles will be gradually reduced from a peak rate of 110 percent to 10 percent, while rates for wine will decrease from 150 percent to 20 percent.
Additionally, prepared foods currently subject to a 50 percent tariff, including pasta and chocolate, will be duty-free, according to the EU.
Von der Leyen anticipates that EU exports to India will double.
Important for Norway
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Norway and the three other EFTA countries (Iceland, Liechtenstein, and Switzerland) entered into a trade agreement with India in 2024, which came into effect on October 1, 2024. The agreement secures “zero tariffs” on almost all Norwegian exports to India and opens up for the export of new products,
Minister of Trade and Industry Cecilie Myrseth.
Foto: Oda Andrea Opheimsbakken / NRK
EU Shifts Role
The agreement encompasses more than just trade. A separate agreement on security and defense between the EU and India is also being established.
Cooperation on hybrid threats and surveillance is planned.
Agreements on climate, education, and technology are also forthcoming.
The EU is seeking to build new alliances as ties with the United States weaken.
“Europe must accelerate towards independence, from security to the economy, from defense to democracy. The world has changed permanently,” Ursula von der Leyen said recently in Davos.
Unpredictable US
The EU-India agreement comes just days after the EU signed a significant pact with the South American trade bloc Mercosur. Last year, the EU concluded important trade deals with Indonesia, Mexico, and Switzerland, while India reached agreements with the United Kingdom, New Zealand, and Oman.
This series of agreements reflects the uncertainty created by the Trump administration’s tariff threats and even suggestions of acquiring Greenland, and the effort to hedge against it.
Former U.S. President Donald Trump imposed 50 percent import tariffs on goods from India, and a trade deal between the two countries collapsed last year. Trump also tightened tariffs on the EU and threatened to increase them further.
Implementation Still Ahead
Modi and European Commission President Ursula von der Leyen held a joint press conference on the agreement in New Delhi on Tuesday.
It will not be formally signed until after a comprehensive legal review, which is expected to take five to six months, according to a source in the Indian government familiar with the matter.
“We expect the agreement to be implemented within one year,” the source said.
Trade between the EU and India totaled $136.5 billion in the fiscal year ending March 2025.
(NTB/NRK)
Published
January 27, 2026, at 8:25 AM
Updated
January 27, 2026, at 10:14 AM
