India, EU unlock trade corridors with FTA

Its timing is crucial.

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India is looking to secure a heavyweight export market as its manufacturers confront the impact of a 50 per cent tariff imposed by the United States.For the EU, the deal opens greater access to a fast-growing economy at a time when its own trade ties with Washington are increasingly strained.

The conclusion of the talks was announced by Prime Minister Narendra Modi, alongside the visiting president of the European Council, Antonio Costa, and the president of the European Commission, Ursula von der Leyen. Both sides also unveiled a comprehensive strategic agenda for the next five years, a security and defence partnership, and memoranda of understanding on a comprehensive framework on cooperation on mobility and green hydrogen task force.

Once the deal comes into force -- expected later this year or early 2027 -- it will become India’s eighth trade agreement in the past five years. Since 2021, New Delhi has signed seven such pacts, three of them -- with the United Kingdom, Oman and New Zealand -- finalised in 2025 alone.

Under the EU deal, New Delhi will cut duties to zero on about 30 per cent of the value of bilateral trade from the day the agreement takes effect, with coverage expanding in phases to 93 per cent of trade value over a decade. The European bloc, meanwhile, will remove tariffs on 90 per cent of Indian exports from day one, with the remainder phased out over seven years.

Prime Minister Modi described the agreement as the biggest free-trade pact India has ever concluded. “This is not just a trade agreement. This is a new blueprint for shared prosperity,” Modi said. ‘Taken together, India and the EU account for about 25 per cent of global GDP and roughly one-third of international trade, estimated at around $33 trillion. The European Commission president hailed the outcome as “the mother of all deals”.