The European Union and India have announced a landmark trade deal after nearly two decades of on-and-off talks, as both sides aim to deepen ties amid tensions with the United States.
“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 a number of huge tariff cuts across a range of goods and services, and 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 said the agreement would eliminate tariffs on most exports of chemicals, machinery and electrical equipment, as well as aircraft and spacecraft, following phased reductions.
Significantly, duties on motor vehicles, currently as high as 110%, would be cut to 10% under a quota of 250,000 vehicles.
That is six times larger than the 37,000-unit quota India granted to the UK in a deal signed last July, Bloomberg reported.
India will also cut tariffs on wine, beer, and olive oil from the EU. Brussels said the agreement would support investment flows, improve access to European markets, and deepen supply-chain integration.
Delhi said almost all of its exports would get “preferential access” into the EU, with textiles, leather, marine products, handicrafts, gems, and jewelry set to see a reduction or elimination of tariffs.
While commodities such as tea, coffee, spices, and processed foods will benefit from the agreement, Delhi “has prudently safeguarded sensitive sectors, including dairy, cereals, poultry, soy meal, certain fruits and vegetables, balancing export growth with domestic priorities”, it said.
Delhi and Brussels have also agreed on a mobility framework that eases restrictions for professionals to travel between India and the EU in the short term.
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“This is India’s biggest free trade agreement,” Modi said. “It will make access to European markets easier for India’s farmers and small businesses.
“It will also boost the manufacturing and services sectors. It will boost innovative partnerships.”
The trade deal comes as both India and the EU contend with economic and geopolitical pressure from the US.
Delhi is grappling with 50% tariffs imposed by President Donald Trump last year amid talks aimed at securing a trade deal between India and the US that are still dragging on.
Last week, Trump threatened to escalate his trade war with European allies for opposing a US takeover of Greenland, before backing off.
That larger geopolitical context was evident in statements made by leaders.
On Tuesday, von der Leyen said: “This is the tale of two giants – the world’s second and fourth largest economies.
“Two giants that chose partnership in a true win-win fashion. A strong message that co-operation is the best answer to global challenges.”
A day before that, Costa had said, without naming the US, that the trade deal would send an “important political message to the world that India and the EU believe more in trade agreements than in tariffs.”
The deal with the European Union may help labour-intensive sectors in India, such as shrimp farming, textiles, gems, and jewelry, which were hit hard by the US tariffs, experts say.
