EU–India Seal ‘Mother of All Deals,’ Creating a $2 Billion-People Free Trade Zone

[AFP] The European Union and India have announced a landmark trade agreement dubbed the “mother of all deals,” creating a free trade zone of nearly two billion people and representing around 25 percent of global GDP.

Finalised after more than 20 years of negotiations, the pact is being hailed by Prime Minister Narendra Modi and EU leaders as a strategic move to strengthen their economies amid growing pressure from the United States and China. Modi said the agreement accounts for roughly one-third of global trade.

Under the deal, the EU will cut or remove tariffs on almost 97 percent of its exports to India, saving European companies up to €4 billion annually. Duties on cars, wines, processed foods, and other key products will be sharply reduced or eliminated, giving European firms unprecedented access to the traditionally protected Indian market.

European Commission President Ursula von der Leyen called the agreement historic, saying it creates the largest free trade zone India has ever entered and offers European businesses a significant first-mover advantage, particularly in agriculture, automotive, services, finance, and maritime transport.

For India, the pact is expected to boost exports in textiles, gems and jewellery, leather goods, and services, while attracting vital European technology and investment to support infrastructure growth and job creation.

Bilateral trade in goods reached €120 billion in 2024, with services adding another €60 billion. EU officials expect exports to India to double as a result of the agreement.

The accord comes as both sides seek to diversify trade partnerships in response to US tariffs and Chinese export controls. Parallel agreements on labour mobility, security, and defence cooperation are also expected.

Von der Leyen said the deal sends a clear message that strategic partnership and openness remain viable in a fractured global economy.