India and the European Union are close to finalising a historic free trade agreement that would create a market of 2 billion people and cover nearly a quarter of the world’s GDP, European Commission President Ursula von der Leyen said on Tuesday
India and the European Union are on the verge of a “historic trade agreement” that would create a market of 2 billion people, accounting for nearly a quarter of global GDP, European Commission President Ursula von der Leyen said on Tuesday. Her remarks came at the World Economic Forum in Davos, just days before her trip to Delhi.
“I will travel to India. There is still work to do. But we are on the cusp of a historic trade agreement. Some call it the mother of all deals,” von der Leyen said, highlighting the scale and significance of the pact.
The announcement comes amid US President Donald Trump’s recent use of tariffs against India and European nations to influence trade positions.
Strategic timing and EU ambition
“It is time to seize this opportunity and build a new independent Europe,” von der Leyen added, referring to current “geopolitical shocks” and the EU’s efforts to diversify and de-risk its trade partnerships.
Von der Leyen will visit India alongside European Council President Antonio Costa from 25 to 27 January as chief guests for Republic Day and hold summit talks with Prime Minister Narendra Modi. Negotiators are expected to announce the conclusion of the long-awaited Free Trade Agreement at the India-EU summit on 27 January.
Why the deal matters
The proposed pact would link one of the world’s fastest-growing major economies with a bloc central to global trade, potentially reshaping supply chains at a time when nations are reassessing economic dependencies.
For the EU, India represents a crucial partner in reducing reliance on China. For India, closer access to the 27-nation bloc—its second-largest trading partner—would enhance export competitiveness and support ambitions to move up the manufacturing value chain.
A decade-long journey
Talks on an India–EU free trade agreement began in 2007 but stalled for nearly a decade before resuming in 2022 with renewed political will. Since then, negotiations have run alongside the India–EU Trade and Technology Council, a platform fostering cooperation on critical technologies, digital governance, and supply-chain resilience. This parallel track has helped narrow regulatory gaps and modernise discussions beyond tariffs.
Economic and geopolitical urgency
Rising geopolitical pressures have accelerated the timeline on both sides. Brussels seeks to diversify away from single-country dependencies, while India aims to establish itself as a central hub in restructured global supply chains.
Bilateral trade has already reached record levels: goods trade hit €124 billion in 2023, while services—led by digital and IT—totalled around €60 billion. Observers say a formal agreement could unlock significant additional potential, particularly in sectors such as clean energy, pharmaceuticals, advanced manufacturing, and digital services.
Looking ahead
Von der Leyen emphasised the strategic advantage for Europe: “This would provide a first-mover advantage with one of the world’s fastest-growing and most dynamic markets. From Latin America to the Indo-Pacific and far beyond, Europe will always choose the world. And the world is ready to choose Europe.”
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