NEW DELHI: India and the European Union have finalized a landmark trade deal, Indian Prime Minister Narendra Modi said on Tuesday, as the two sides seek to hedge against fickle ties with the US, Reuters reported.
After nearly two decades of on-off negotiations, the deal will pave the way for India to open up its vast and guarded market, the world's most populous, to free trade with the 27-nation EU, its biggest trading partner.
"Yesterday, a big agreement was signed between the European Union and India," Modi said.
"People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe," he said.
Modi and European Commission President Ursula von der Leyen are expected to make a joint announcement at an India-EU summit in New Delhi, along with the details of the deal, later on Tuesday.
The formal signing of the India-EU deal would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter has said.
Tariffs on food, wine, cars, aircraft slashed
The trade pact will cut or eliminate tariffs on almost 97% of European exports, saving up to €4 billion ($4.75 billion) annually in duties, the EU has said, as per AFP.
Tariffs on cars will be gradually lowered from a top rate of 110% to as low as 10%, while duties on wines will be reduced from 150% to as low as 20%. Tariffs on processed foods, including pasta and chocolate, currently at 50%, will be completely eliminated, the AFP report added, citing the bloc.
Reuters added that tariffs would also be eliminated on almost all EU-made planes and spacecraft, and on about 90% of optical, medical and surgical equipment. The deal would double EU exports to India, the bloc said.
PTI, citing an Indian government official, reported that, except for autos and steel, more than 93% of Indian goods will get zero-duty access in the EU. Of the remaining share, Indian exporters will receive tariff reductions and quota-based duty concessions, including for automobiles.
The EU will eliminate import duties on 90% of Indian goods on the first day of implementation of the free trade agreement, expected to come into force early next year. On another 3%, levies will be phased out over seven years, PTI added.
“So 99.5% of the trade value, concessions are being given by the EU to India,” the official said.
In return, the EU will get duty-free access for 93% of its goods over a 10-year period in India. India will remove duties on 30% of European goods on the first day of implementation, and provide duty concessions or quota-based reductions on another 3.7% of trade value. Overall, India is giving duty concessions on 97.5% of the trade value for the EU, the official said.
Sectors expected to gain duty-free access include textiles and apparel, marine products, chemicals, plastics, rubber, leather and footwear, base metals, gems and jewellery, furniture, toys and sports goods, according to the PTI report.
Trade between India and the EU stood at $136.5 billion in the fiscal year through March 2025.
India-US trade deal pending
The agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.
During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.
The spate of deals underscores global efforts to hedge against the US as President Donald Trump's bid to take over Greenland and tariff threats on European nations test longstanding alliances among Western nations.
Talks between India and the EU were relaunched in 2022 after a nine-year lull, and gathered momentum after Trump put tariffs on several trading partners, including a 50% tariff on goods from India.
An India-US trade deal collapsed last year after a breakdown in communication between the two governments.
"We expect the deal to be implemented within a year," the official added.
