India and the European Union have finalized a landmark trade agreement that will cover a quarter of the world’s economy, Prime Minister Narendra Modi announced on Tuesday. The deal comes as both sides look to diversify their economic partnerships amid unpredictable relations with the United States.
After nearly two decades of intermittent negotiations, the pact will allow India to open its vast, closely guarded market to free trade with the 27-nation EU, its largest trading partner.
"Yesterday, a major agreement was signed between India and the European Union," Modi said. "People around the world are calling this the mother of all deals. This agreement will bring significant opportunities for India’s 1.4 billion people and millions in Europe."
Modi added that the deal accounts for 25% of global GDP and one-third of worldwide trade. European Commission President Ursula von der Leyen and Modi are expected to make a joint announcement at an India-EU summit in New Delhi later Tuesday, unveiling further details.
Bilateral trade between India and the EU reached $136.5 billion in the fiscal year ending March 2025.
The agreement follows a series of recent EU trade deals, including pacts with Mercosur, Indonesia, Mexico, and Switzerland, while India has recently concluded agreements with the UK, New Zealand, and Oman.
The flurry of agreements reflects a broader global effort to diversify trade away from the United States, particularly amid former President Donald Trump’s proposed Greenland acquisition and his tariff impositions on European countries. India itself faced a 50% U.S. tariff on its goods, and a planned India-U.S. trade deal collapsed last year.
The formal signing of the India-EU agreement will occur after a legal review expected to take five to six months, according to an Indian government official.
