India EU strike landmark trade agreement

India and the European Union have agreed a sweeping free trade deal that promises to reshape economic relations between two of the world’s largest markets, marking a rare breakthrough for global trade at a time of rising protectionism. The agreement, described by officials as the “mother of all trade deals”, links economies representing roughly a quarter of global GDP and close to two billion people.

The pact concludes negotiations that have stretched on and off for nearly two decades, reflecting both sides’ urgency to secure more resilient trade partnerships. It will slash or eliminate tariffs across a broad range of goods, creating one of the largest free trade zones ever formed. For the EU, the deal opens deeper access to one of the fastest-growing major economies, while India gains preferential entry to a vast consumer market at a critical stage of its industrial expansion.

European exporters are expected to benefit from lower duties on automobiles, machinery, pharmaceuticals and alcoholic beverages, sectors that have long faced high barriers in India. In return, Indian producers will gain improved access for textiles, leather goods, gems and jewellery, helping support export growth and job creation. The agreement is expected to significantly increase bilateral trade over the coming decade and reduce costs for companies operating across both regions.

Beyond tariffs, the deal carries wider strategic implications. It reflects a shared desire to diversify supply chains and reduce reliance on any single trading partner, particularly amid uncertainty surrounding US trade policy and geopolitical tensions. For India, the agreement reinforces its ambition to position itself as a manufacturing and investment hub, while the EU sees it as a way to strengthen economic influence in Asia.

Investors have welcomed the deal as a positive signal for long-term growth. Improved market access and clearer trade rules are likely to support cross-border investment, particularly in manufacturing, logistics and services. European firms may accelerate plans to expand production and partnerships in India, while Indian companies could see greater opportunities for global scaling.

The agreement will still require ratification, and implementation is expected to be phased in over several years. However, its conclusion sends a strong message at a fragile moment for the global economy. As trade fragmentation deepens elsewhere, the India–EU pact stands out as a rare example of large economies choosing integration over barriers, with significant implications for growth, investment and global trade flows.

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