European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi met in New Delhi on February 28, 2025, as the European Union explores a strategic security and defense partnership with India. This pivotal dialogue comes on the heels of a groundbreaking free trade agreement (FTA) signed by India and the EU, hailed as the “mother of all deals” by Modi during his address at India Energy Week.
This landmark FTA will establish a market of approximately 2 billion people, fortifying trade relations at a time when global trade dynamics are fraught with geopolitical tensions. The EU, which represents 25% of the world’s GDP and accounts for about a third of global trade, will complement India’s existing trade agreements with nations such as the UK and the European Free Trade Association.
Modi expressed congratulations to various sectors, including textiles, gems and jewelry, and leather, emphasizing that the deal will be beneficial for these industries. Both Modi and von der Leyen are set to announce further details of the agreement during the impending India-EU summit, which has been in negotiation for nearly two decades.
For India, this FTA comes at a crucial time as it grapples with punitive U.S. tariffs that have made U.S. markets less accessible since former President Trump imposed a 50% tariff on Indian goods last August. As a result, India is increasingly pivoting towards alternative markets, establishing trade agreements with the UK, Oman, and New Zealand in recent years.
This new trade pact with the EU marks India’s fourth significant trade agreement since the U.S. implemented its steep tariffs. According to European Commission data, trade between India and the EU reached over 120 billion euros (approximately $140 billion) in 2024, positioning the EU as New Delhi’s largest trading partner. India’s leading exports to the bloc include machinery, textiles, and chemicals. Despite being the ninth largest trading partner of the EU, India’s total share of the EU’s trade stands at 2.4%, significantly behind major partners like the U.S. and China.
At the World Economic Forum in Davos, von der Leyen articulated the EU’s commitment to “choosing fair trade over tariffs” and fostering partnerships over isolation, emphasizing sustainability. In contrast, India’s total exports to key EU markets, including Germany and France, totaled $43.8 billion over a nine-month period, compared to $65.88 billion with the U.S.
While experts commend the new EU trade deal as a vital step for India, they caution that it cannot replace the necessity of an India-U.S. agreement. Recent data indicates that India recorded a $45.8 billion trade surplus with the U.S. in 2024, compared to a narrower $25.8 billion surplus with the EU.
As negotiations proceed, both India and the European Union stand on the brink of a transformative partnership that could redefine trade dynamics, enhance security cooperation, and ultimately strengthen economic resilience in an increasingly interconnected world.
Original Source: https://www.cnbc.com/2026/01/27/india-eu-trade-deal-trump-tariffs.html
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Publish Date: 2026-01-27 11:29:00
