Europe–India: “the Mother of all free trade agreements”, after twenty years of negotiations

Von der Leyen from New Delhi: “We have made history.” Tariff cuts, new opportunities for European businesses, and a strategic partnership on defence and security.

After more than twenty years of negotiations, the European Union and India have reached a free trade agreement set to redefine global commercial balances. The deal was announced in New Delhi by European Commission President Ursula von der Leyen, European Council President Antonio Costa, and Indian Prime Minister Narendra Modi. The agreement opens the doors to a market of around two billion people and comes at a geopolitical moment marked by trade tensions with the United States and the introduction of new tariffs by Washington.

The agreement provides for a significant reduction of tariff and non-tariff barriers, with an overall cut in duties estimated at €4 billion. The European agri-food sector stands to benefit in particular: tariffs on wine will fall from 150% to 75% upon entry into force of the agreement and will then be gradually reduced to 20%, while duties on olive oil will be eliminated within five years. The European Commission has assured that the most sensitive agricultural sectors will remain protected and that Indian imports will continue to comply with the EU’s strict health and food safety standards.

On the industrial front, the deal will drastically reduce tariffs on automobiles, which will drop from 110% to 10% within an annual quota of 250,000 vehicles, as well as on key sectors such as machinery, chemicals, pharmaceuticals, medical devices, steel, and aerospace. “Europe and India have made history today,” von der Leyen wrote on X. Modi highlighted the benefits for the Indian economy, particularly for textiles, gems, jewellery, and leather goods. Beyond trade, the EU and India also signed a partnership on security and defence, strengthening cooperation on counter-terrorism, cybersecurity, and the defence industry, in line with the EU’s new strategies to bolster its defence capabilities.

Andrea Pelucchi