India & European Union on cusp of 'historic trade agreement': Ursula von der Leyen

New Delhi: After nearly two decades of negotiations, India and the 27-nation bloc European Union (EU) are likely to ink a free-trade agreement next week that will lower tariffs and ease non-tariff barriers to boost trade.

European Commission President Ursula von der Leyen on Tuesday said India and the EU are on the cusp of a “historic trade agreement”.

“I will travel to India. There is still work to do. But we are on the cusp of a historic trade agreement. Some call it the mother of all deals. One that would create a market of two billion people, accounting for almost a quarter of global GDP,” von der Leyen said in a televised address at the World Economic Forum in Davos.

Von der Leyen and European Council president Antonio Costa are scheduled to visit India from January 25 to 27 as chief guests for the Republic Day. They are scheduled to hold summit-level talks with the Indian leadership led by PM Narendra Modi. According to top official sources, the trade deal is likely to be announced at the India-EU Summit on January 27.

Commerce and Industry Minister Piyush Goyal has described the proposed
India-EU free trade agreement as the “mother of all deals”.

“We have done FTA deals with seven developed countries so far. This one (EU) will be the mother of all. It will cover two of the world’s most powerful economies,” Goyal told reporters in New Delhi last week.

Commerce Secretary Rajesh Agrawal said last week that India and the EU have fully closed 20 of the 24 negotiating chapters and are working to wrap up the remaining ones.

India and the EU first launched negotiations for a free trade agreement in 2007. The talks were suspended in 2013 due to a gap in ambition. The negotiations were re-launched in June 2022. The proposed trade deal is now officially called the India–EU Free Trade Agreement (India–EU FTA). During the 2007-2013 negotiations, it was named Broad-based Trade and Investment Agreement (BTIA),

“Once concluded, this would be India’s largest FTA in both economic size and regulatory scope. As the EU is a customs union, the agreement would give India preferential access to all 27 EU countries under a single framework,” said Global Trade Research Initiative (GTRI) founder Ajay Srivastava.

The EU is India’s biggest trade partner with bilateral trade in goods recording $137 billion in the financial year 2024-25. Trade balance is in favour of India. India exported about $76 billion of goods to the EU while importing $61 billion during the year.

The EU agreement would be India’s ninth trade deal concluded in the last four years. Other FTAs include agreements with Mauritius, the UAE, Australia, New Zealand, Oman, the EFTA bloc, the UK and members of the Indo-Pacific Economic Framework (IPEF).

The EU is one of the world’s richest and most stable markets with a GDP of roughly 18–22 trillion euro and 45 crore high-income consumers. A favourable deal with the EU would help Indian firms better absorb shocks from higher US tariffs.

For the European exporters, the FTA would unlock significant opportunities in aircraft, machinery, chemicals and other high-value manufactured goods, while expanding access in services, government procurement and investment.