India and the European Union have reached a historic trade agreement, which is set to cover a quarter of the world’s economic output. The pact follows two decades of negotiations, signaling a significant shift for India’s trade strategy and offering new opportunities for investors amid evolving geopolitical conditions.
The newly agreed deal will create a combined market of approximately two billion people, as both sides look to diversify trading relationships in response to shifting dynamics with the United States. The arrangement will open India’s extensive and previously protected marketplace to businesses from the 27-member EU, currently its largest trading partner.
An official announcement detailing the agreement is expected later at a joint summit in New Delhi, where Indian Prime Minister Narendra Modi and EU President Ursula von der Leyen will present further terms. The deal follows recent EU trade agreements with other global partners, including Mercosur, Indonesia, Mexico, and Switzerland, while India has secured separate pacts with Britain, New Zealand, and Oman.
The accord offers India, which has recently contended with U.S. tariffs—most notably a 50% duty introduced by President Donald Trump, substantial relief and access to new export markets. Over the past year, India has been broadening its trade links to mitigate the effects of such measures.
The agreement’s formal signing is anticipated following a legal review process expected to last five to six months, according to a senior Indian government official.
Trade between India and the EU reached more than EUR 120 billion euros in 2024, based on European Commission figures, making the EU India’s top trading partner. In contrast, India comprised just 2.4% of the EU’s goods trade that year, ranking ninth behind countries such as the U.S., China, and the U.K.
