India and EU Strike Landmark ‘Mother of All’ Trade Deal

India and the European Union (EU) have agreed on a landmark trade deal, creating a free trade zone of two billion people, European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi announced.

Describing the agreement as the “mother of all deals,” von der Leyen said both sides will benefit significantly. Modi highlighted that the pact, following nearly two decades of negotiations, will create opportunities for India’s 1.4 billion people and millions across the EU.

The deal covers about 25% of global GDP, boosting sectors such as textiles, gems and jewellery, leather goods, machinery, chemicals, pharmaceuticals, and aerospace. EU tariffs on 96.6% of goods exported to India will be eliminated or reduced, saving up to $4.74 billion annually. Car tariffs will gradually fall to 10% under a quota of 250,000 vehicles per year, while wine, spirits, and beer tariffs will be reduced. EU service providers will gain privileged access to India in financial and maritime services.

The pact opens India’s previously protected market to the EU, while New Delhi views Europe as a source of technology and investment. Bilateral trade in goods has already grown nearly 90% over the past decade to $139 billion in 2024, with services adding another $69 billion.

Legal vetting of the deal is expected to last five to six months, with implementation likely within a year. The agreement coincides with a new EU-India security and defence partnership, enhancing strategic ties amid efforts by both sides to diversify defense sourcing.

This historic trade deal follows recent EU agreements with Mercosur, Indonesia, Mexico, and Switzerland, and India’s pacts with the UK, New Zealand, and Oman, signaling a significant expansion of global trade engagement.

Source: Al Jazeera