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Hind Al Soulia - Riyadh - NEW DELHI — India and the European Union on Monday closed a “landmark” free trade agreement, Prime Minister Narendra Modi said during a speech at the India Energy Week on Tuesday.
The FTA with the EU, which represents about 25% of global GDP and about a third of global trade, will also complement India’s deals with Britain and the European Free Trade Association, Modi said.
European Commission President Ursula von der Leyen and European Council President António Luís Santos da Costa arrived in Delhi over the weekend and were the chief guests at India's colourful Republic Day celebrations on Monday.
The agreement will forge a market of 2 billion people at a time when trade ties are being tested amid rising geopolitical tensions.
“I congratulate our colleagues associated with every sector, such as textiles, gems and Jewelry, leather and shoes. This deal will prove to be very supportive to these sectors,” Modi said in a speech in Hindi.
India's Commerce Secretary Rajesh Agarwal said on Monday that negotiations had been wrapped up and the deal finalized.
Both India and the EU are seeking to strengthen strategic and trade ties with the rest of the world as they 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.
The EU has just emerged from a stressful week after Trump threatened to escalate his trade war with European allies for opposing a US takeover of Greenland before backing off.
The trade deal will send an "important political message to the world that India and the EU believe more in trade agreements than in tariffs" at a time when protectionism is on the rise and "some countries have decided to increase tariffs", Costa said on Monday without naming the US.
Von der Leyen said that Europe and India are "committed to working together to shape a new global order".
On Tuesday, Von der Leyen and Costa will meet Modi and attend a bilateral summit, after which the deal is expected to be formally announced.
The formal signing is likely to take place only later this year, after the agreement is approved by the European Parliament and the European Council.
The deal will expand market access for Indian exports to Europe while easing entry for European investments and goods, such as cars and beverages, into Asia's third-largest economy.
Talks for a deal between India and the EU started in 2007 but stalled in 2013 over roadblocks in market access and regulatory demands. Discussions were formally restarted in July 2022.
The main sticking points were access to India's automobile market, agriculture goods and carbon-linked tariffs - and analysts will be reading the fine print to see what the final agreement says on these issues.
Officials from both sides worked hard over the past few days to finalise outstanding chapters of the agreement, aiming to wrap it up before the EU leaders' visit.
The agreement — von der Leyen and India's commerce minister Piyush Goyal have described it as the "mother of all trade deals" — comes as pressure grows on Delhi and Brussels to secure alternative markets for exporters.
In the past seven months, India signed major trade agreements with the UK, Oman and New Zealand, and a 2024 pact signed with the four-nation European Free Trade Association bloc of Switzerland, Norway, Iceland and Liechtenstein has come into effect. — Agencies
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