India and the European Union (EU) finalised the free trade agreement (FTA) on Tuesday, 27 January. The proposed FTA, also referred to as “mother of all deals”, is the largest trade pact ever concluded by both sides.
According to the EU’s official statement, the deal is expected to strengthen economic and political ties between the world’s second and fourth-largest economies amid rising geopolitical tensions and global economic challenges.
The deal also comes at a time when US President Donald Trump imposed tariffs on trading partners. The Trump administration levied 50% tariffs on India last year amid a trade deal between the two countries. Meanwhile, Trump threatened to escalate his trade war with European allies over their opposition to a US takeover of Greenland, then reversed his stance.
Has India-EU free trade agreement been signed yet?
Notably, the deal has not been officially signed yet. On Tuesday, 27 January, India and the EU announced the completion and finalisation of their free trade agreement negotiations. The agreement is expected to be signed later this year, PTI reported.
When will the India-EU FTA come into force?
The proposed agreement could take effect early next year. The FTA negotiations began in 2007 and were concluded after 18 years.
What are the next steps for the deal to become effective?
According to the EU statement, the following steps will be taken for the deal to come into force —
Why has the FTA been called the ‘mother of all deals’?
The announced FTA has been referred to as “the mother of all deals”. On Tuesday, Prime Minister Narendra Modi echoed the words of European Commission President Ursula von der Leyen and called the FTA “mother of all deals”.
A Commerce Ministry official told PTI that the India-EU trade deal is one of the largest bilateral trade deals concluded across the globe.
The official further noted that the China-ASEAN trade agreement is also one of the largest, but ASEAN is a grouping of 10 distinct Southeast Asian countries. Unlike the EU, they are not a customs union. The member countries are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
“So it’s a huge deal in that sense,” the official said.
In terms of scale, the FTA affects about 1.9 billion people, 1.4 billion in India and roughly 500 million in the EU. India and the EU together represent 25% of the global economy and constitute 30% of the world’s population. In 2024, the EU’s total goods imports reached $6.9 trillion, with services imports at $2.9 trillion. India’s goods imports were approximately $750 billion in the same year. Together, they account for roughly 11 to 12% of global trade. Out of the $33 trillion in worldwide trade, India and the EU together contribute $11 trillion.