New Delhi: Prime Minister Narendra Modi is set to host the 16th India-European Union (EU) Summit in the national capital on Tuesday. The summit will witness the historic announcement of the largest trade agreement between India and the EU, described as the ‘mother of all agreements’, by Ursula von der Leyen, President of the European Commission, and Antonio Costa, President of the European Council.
According to Commerce Secretary Rajesh Agrawal, the long-standing negotiations on the Free Trade Agreement (FTA) between India and the EU have been completed. The official announcement of this agreement will be made during the 16th India-EU Summit.
The summit aims to strengthen the strategic partnership between India and the EU, focusing on critical sectors such as trade, security and defence, clean energy, and people-to-people cooperation.
Officials have stated that after the legal scrutiny of the agreement, it is expected to be signed within approximately six months and is likely to come into effect from next year.
In recent years, India-EU relations have seen significant positive momentum, providing a conducive environment for this summit and the agreement.
Rajesh Agrawal described the agreement as balanced and future-ready, emphasising that it will enhance economic cooperation and accelerate trade and investment between the two partners.
The India-EU Free Trade Agreement is considered a major step towards expanding India’s global trade footprint. It could also help mitigate the impact of high tariffs imposed by the United States by providing greater access for Indian products in the European market, particularly benefiting sectors like textiles and jewellery.
A significant impact of the agreement is expected in the automobile sector, as it will open the Indian market to European car manufacturers. Currently, European cars face import duties as high as 110 percent, which could be reduced to around 40 percent under this deal. This reduction could make vehicles from brands such as Volkswagen, Mercedes-Benz, and BMW more affordable in India.
At present, European car companies hold only about 4 percent of the Indian market share out of the 4.4 million cars sold annually in the country.
The European Union is already one of India’s largest trading partners. The EU accounts for approximately 17 percent of India’s total exports, while India represents about 9 percent of the EU’s total foreign exports.
In the financial year 2024-25, the total merchandise trade between India and the EU reached $136.53 billion, with India exporting goods worth $75.85 billion and importing $60.68 billion. This makes the EU India’s largest trading partner.
Additionally, trade in services between the two reached $83.10 billion in 2024, highlighting the growing economic ties.
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