India and EU Seal 'Monumental Trade Agreement' Amid Global Tensions

Mon Feb 02 2026 21:25:50 GMT+0200 (Eastern European Standard Time)

In a significant development, India and the European Union have concluded a landmark trade agreement, hailed as a 'mother of all trade deals'. This pact is expected to bolster economic ties between the two regions amidst ongoing geopolitical pressures.

The European Union and India have finalized a major trade agreement after nearly two decades of negotiations. This deal, which leaders call the 'mother of all deals', aims to enhance free trade and reduce tariffs on various goods and services, with notable cuts in automobile tariffs and provisions for professional mobility. As both regions face economic strains from the US, this agreement symbolizes a shift towards collaboration and mutual economic growth.

The European Union and India have announced a landmark trade deal after nearly two decades of on-off talks, as both sides aim to deepen ties amid tensions with the US.

We did it, we delivered the mother of all deals, European Commission President Ursula von der Leyen said at a media briefing in Delhi. Indian Prime Minister Narendra Modi called the pact historic.

It will allow free trade of goods between the bloc of 27 European states and the world's most populous country, which together make up nearly 25% of global gross domestic product and a market of two billion people.

The deal will see huge tariff cuts across various goods and services, along with a joint security partnership.

Von der Leyen and European Council President António Costa are in Delhi, where they met Modi at a bilateral summit.

The European Commission stated it would eliminate tariffs on most exports of chemicals, machinery, and electrical equipment, as well as aircraft and spacecraft, following phased reductions. Notably, duties on motor vehicles, currently as high as 110%, would be cut to 10% under a quota of 250,000 vehicles, significantly higher than the UK's 37,000-unit quota.

India will also reduce tariffs on wine, beer, and olive oil imports from the EU, with the agreement supporting investment flows and enhancing access to European markets.

Delhi assured almost all of its exports would receive preferential access into the EU. Products like textiles, leather, marine products, handicrafts, gems, and jewellery will experience reduced or eliminated tariffs.

While the agreement is set to benefit commodities such as tea, coffee, spices, and processed foods, Delhi has safeguarded sensitive sectors including dairy, cereals, and poultry.

The deal also establishes a mobility framework easing restrictions for professionals traveling between India and the EU.

Describing it as India's biggest free trade agreement, Modi emphasized its positive impacts on farmers and small businesses, as well as potential boosts to manufacturing and services sectors.

The trade agreement emerges as both India and the EU face economic and geopolitical pressures from the US. Delhi is currently navigating 50% tariffs imposed by President Trump amid ongoing trade deal discussions with the US.

Amidst the backdrop of escalating global tensions, Von der Leyen stated, This is the tale of two giants - the world's second and fourth largest economies, partnering to tackle global challenges through cooperation. The deal signals a shift towards prioritizing trade relationships over protective tariffs.

The formal signing is expected to occur later this year following approval from the European Parliament and member states. Despite some concerns related to compliance with strict EU regulations, experts suggest that the agreement serves as a foundation for deepening bilateral relations and global economic integration.