India, EU Sign Landmark Trade & Security Deal

India and the European Union on Tuesday finalized what both sides called a historic free trade agreement, pairing commercial integration with a new security and defense partnership as New Delhi and Brussels seek resilience amid U.S. tariffs and Chinese export controls.

The pact creates a free trade zone spanning roughly two billion people and, according to Indian Prime Minister Narendra Modi, covers about 25% of global gross domestic product. Modi described it as “the largest-ever Free Trade Agreement in its history.”

“The Mother of All Deals”

European Commission President Ursula von der Leyen echoed the framing, calling it “the mother of all deals”. She claimed they were creating a market of two billion people that will cut up to 4 billion euros in annual tariffs for exporters of all sizes.

The agreement caps nearly two decades of on-off negotiations launched in 2007, revived in 2022 after Russia’s full-scale invasion of Ukraine, and accelerated by President Donald Trump’s aggressive tariff posture.

Modi said the deal would bring opportunities for India’s 1.4 billion people and “the millions of people of the EU”, while Von der Leyen added that both sides are set to benefit from the deal.

The Deal in Numbers

Economically, the numbers are material. Bilateral trade in goods reached about 120 billion euros ($139bn) in 2024, with a further 60 billion euros ($69bn) in services. Under the agreement, tariffs on 96.6% of EU goods exports to India would be eliminated or reduced, EU officials said, saving up to 4 billion euros ($4.74bn) a year in duties.

Machinery, chemicals, and pharmaceuticals are among the categories set for full or near-full tariff removal. Car tariffs will fall gradually to 10% under a quota of 250,000 vehicles a year.

Tariffs on EU aircraft and spacecraft would be eliminated for almost all products. For agri-goods, tariffs are slated to drop to 20-30% on wine, 40% on spirits, and 50% on beer, while levies on fruit juices and processed food would be eliminated.

Brussels expects its exports to India to double by 2032. Last minute talks focused on sticking points including the impact of the EU’s carbon border tax on steel, sources told AFP. The formal signing will follow legal vetting expected to take five to six months, with implementation targeted within a year, according to an Indian government official cited by Reuters.

Security Pact Alongside Trade

Beyond tariffs, the two sides announced a security and defense partnership modeled on EU arrangements with Japan and South Korea.

Modi said “the pact would deepen the partnership” in counter-terrorism, maritime, and cyber security, while also expanding cooperation in the Indo-Pacific, adding that its scope “will further increase,” alongside new opportunities for defense co-development and co-production. The move aligns with India’s effort to diversify military supply chains away from Russia and Europe’s parallel push to reduce strategic dependence on Washington.

The deal lands amid a broader surge in trade diplomacy. Brussels recently finalized an accord with Mercosur and last year concluded agreements with Indonesia, Mexico, and Switzerland. New Delhi has signed pacts with the United Kingdom, New Zealand, and Oman. The shared momentum reflects hedging behavior as U.S. tariff threats test alliances and supply chains. For Europe, India offers scale and growth; for India, Europe brings technology and investment. Together, the partners are knitting a commercial bloc designed to absorb external shocks while opening one of the world’s most protected large markets to EU firms.

Yet as the EU-India Summit concludes in success, humanitarian organizations are concerned as Modi’s humanitarian record draws renewed scrutiny in Europe. Amnesty International’s EU Director Eve Geddie said it was “a crucial moment for two key global players to get their own houses in order” on human rights, and to prioritize human rights across all areas of their relationship.

Formal signing of the deal will follow a legal vetting process expected to take five to six months, with implementation targeted within a year, according to an Indian government official. Until then, the agreement sits at the intersection of economics, security, and values: a two-billion-person market taking shape alongside a new strategic partnership, even as human rights concerns and geopolitical pressures test how far Brussels and New Delhi can translate ambition into durable alignment.