India and EU Finalize Landmark Trade Deal, Says PM Modi

• Trade between India and the EU stood at $136.5 billion in fiscal year 2025, with the deal described as the 'mother of all deals' by observers
• The agreement follows Trump's imposition of 50% tariffs on Indian goods and the collapse of India-U.S. trade talks last year
• Implementation is expected within a year after legal vetting, which will take five to six months before formal signing

Summary

India and the European Union have finalized a landmark trade agreement following nearly two decades of negotiations, Prime Minister Narendra Modi announced on January 27. The deal, which Modi described as the "mother of all deals," represents 25% of global GDP and one-third of global trade, opening India's vast market of 1.4 billion people to the 27-nation EU bloc.

Key Figures:

• Trade between India and the EU totaled $136.5 billion in fiscal year 2024-2025
• The agreement covers approximately a quarter of the world's economy
• Implementation expected within one year following legal vetting (5+ months)

Market Context:

The deal comes amid heightened global trade tensions, particularly with the United States under President Trump, who has imposed 50% tariffs on Indian goods. An India-U.S. trade deal collapsed in 2024 after communication breakdowns. Both India and the EU are actively diversifying trade relationships—the EU recently signed agreements with Mercosur, Indonesia, Mexico, and Switzerland, while India finalized pacts with Britain, New Zealand, and Oman.

Implications:

This agreement represents a strategic pivot for both parties to reduce dependence on uncertain U.S. trade relations. India will open its historically guarded market to free trade with its largest trading partner, creating significant opportunities for businesses and consumers across both regions. The formal signing and implementation will proceed after legal review, with full activation anticipated within 12 months.

A joint announcement with European Commission President Ursula von der Leyen was scheduled for an India-EU summit in New Delhi.