India and the European Union have struck a landmark free trade agreement, blending economic gains with strategic defence against U.S. President Donald Trump’s protectionist policies.
Bilateral goods trade hit $142.3 billion in 2024, making the EU India’s top partner at 11.5% of its total trade while ranking ninth for Brussels.
Talks stalled for nearly 20 years until Trump’s tariff volatility spurred action. The U.S. imposed 50% duties on Indian exports, including a 25% levy over Russian oil buys, rattling both sides.
Canada’s Mark Carney and UK’s Keir Starmer pursue China and India ties despite Trump threats, mirroring this EU-India move—India’s seventh recent pact—after Brussels’ Mercosur deal.
“One could argue that the Trump factor provided a very strong impetus to the deal because both India and the EU are facing shock U.S. tariffs that they never expected,” said Michael Kugelman, senior fellow for South Asia at the Atlantic Council.
He added that Trump is a big reason why the EU and India have been able to overcome most of their differences and put issues they couldn’t resolve on the back-burner for future negotiations.
The deal cuts tariffs on 96.6% of EU exports to India, saving €4 billion yearly in sectors like machinery and autos reduced to 10% duties, while India gains duty-free access for textiles and gems, with goals of doubling EU exports by 2032 and reaching $200 billion bilateral trade by 2030.
Indian PM Narendra Modi and EU Commission President Ursula von der Leyen hailed it as “the mother of all deals.”
“This is the tale of two giants—the world’s second and fourth largest economies—two giants who choose partnership in a true win-win fashion, a strong message that co-operation is the best answer to global challenges,” said von der Leyen, standing beside Modi after they exchanged agreements.
“By combining these strengths, we reduce strategic dependencies at a time when trade is increasingly weaponised… We are not only making our economies stronger—we are also delivering security for our people in an increasingly insecure world.”
Modi said the global order is in “great turmoil” and the trade deal would strengthen supply chains globally. “This means it is not just a trade agreement. This is a new blueprint for shared prosperity,” he said.
U.S. Treasury Secretary Scott Bessent accused the EU of “financing the war against themselves” via India’s Russian oil ties, which Delhi defends as energy security.