After nearly 18 years of negotiations that began in 2007, talks on the Free Trade Agreement (FTA) between India and the European Union have finally been concluded. At a time when former US President Donald Trump is threatening countries across the world with new tariffs, India has continued to move forward, effectively neutralizing such pressures.
Announcing the India–EU FTA, Prime Minister Narendra Modi said that people around the world are referring to it as the “Mother of All Deals.” This agreement brings a massive opportunity for India’s 1.4 billion people as well as millions across European nations. A European Union delegation met Defence Minister Rajnath Singh, following which the Prime Minister informed the nation about the landmark development.
European Commission President Ursula von der Leyen and European Council President Antonio Costa attended India’s Republic Day celebrations as chief guests on Monday, witnessing India’s military strength, courage, and cultural diversity. Their presence as chief guests highlights the strengthening ties between India and the European Union. This deal not only underscores the importance of trade but also reflects India’s growing strength in global diplomacy and its entry into the power play of world politics.
India refused to accept a subordinate role to the United States. Trump wanted to push a trade deal with India on his own terms, even at the cost of disrespecting New Delhi—something Prime Minister Modi found unacceptable. His nationalist policies did not allow such compromises, and therefore India–US trade talks failed to reach a logical conclusion. Any compromise on India’s national interests would also be unacceptable to its citizens.
Trump’s threats regarding Denmark’s Greenland further altered the geopolitical landscape. Europe today faces challenges on multiple fronts—Russian aggression, Chinese pressure, internal weaknesses, and now the fear of abandonment by the US, which has turned into outright intimidation. In contrast, India represents stability. It offers a fast-growing market without posing threats. While New Delhi may not fully align with Europe on issues like climate change or Ukraine, it does not resort to intimidation, asset seizures, or humiliation.
To counter Trump’s tariff strategy, India found it prudent to pursue multiple trade agreements. A deal with Europe was the need of the hour. This agreement forces Trump to acknowledge that India now has multiple strategic options. While the US warned that Europe was indirectly funding Russia’s war by signing an FTA with India, neither India nor Europe took the reaction seriously.
The “Mother of All Deals” promises significant gains for both sides. In FY 2025, India–EU trade exceeded $136 billion, with India’s exports at $76 billion and imports at nearly $60 billion, making the EU India’s largest trading partner. The agreement could reduce or eliminate tariffs on over 90% of goods, benefiting sectors such as textiles, pharmaceuticals, engineering goods, and IT services.
The deal will give India greater access to the EU’s 27-member market, which includes around 450 million consumers, making direct entry for Indian companies much easier. The removal of tariffs will boost exports, attract higher foreign direct investment (FDI), generate employment, and reduce dependence on China by strengthening supply chains.
Both sides will also move forward on a defence framework agreement and strategic agenda. Indian companies may gain access to the EU’s €150 billion defence financing program, while European companies will find a large Indian market for electronics, machinery, aircraft parts, medicines, wine, and more. The EU also seeks better access to India’s passenger vehicle market, where import duties currently range from 100–125%.
According to research, a comprehensive FTA could significantly strengthen India’s trade position. By FY 2031, India’s trade surplus with the EU could increase by over $50 billion, and the EU’s share in India’s total exports could rise from 17.3% in FY 2025 to 22–23%, providing a major boost to export growth.
Trump’s tariff tactics, which violated international norms, have received a clear response. In the coming year, India will closely monitor global economic developments, financial markets, and take strong steps to ensure FTAs are effectively implemented on the ground, while also assessing domestic market reactions. For now, the coming together of two major global economies marks a historic moment.
