Historic India-EU Free Trade Agreement Reaches Signing Stage
After nearly two decades of complex negotiations, India and the European Union are poised to sign a landmark Free Trade Agreement on Tuesday, marking a significant milestone in their economic partnership. Both sides have described the FTA as the 'Mother of all deals', recognizing its transformative potential for bilateral relations between the world's largest democracy and one of its most influential economic blocs.
Strategic Partnership Takes Center Stage
The official announcement is expected during the EU-India summit, where leaders will also likely adopt a comprehensive joint strategic agenda. The discussions will primarily focus on trade matters connected to the free trade agreement negotiations that were initially launched in 2007, revived in 2022, and concluded this week.
European Commission President Ursula von der Leyen emphasized the partnership's significance ahead of the summit, stating: "India and Europe have made a clear choice. The choice of strategic partnership, dialogue and openness. Leveraging our complementary strengths. And building mutual resilience. We are showing a fractured world that another way is possible."
European Council President Antonio Costa highlighted India's importance to the EU, noting: "India is a crucial partner for the EU. Together, we share the capacity and responsibility to protect the rules-based international order."
Substantial Economic Footprint
The India-EU partnership represents a formidable economic force, accounting for:
- Nearly one-fifth of global trade
- Approximately 25% of the world's population
- Goods trade exceeding €120 billion in 2024
Over the past decade, bilateral goods trade between India and the EU has doubled, with EU imports from India growing by an impressive 140% and EU exports to India increasing by 58%. The European Union currently stands as India's second-largest trading partner in goods, representing 11.5% of India's total goods trade.
Trade Composition and Investment Flows
The trade relationship features complementary economic structures:
- EU exports to India primarily consist of machinery and appliances, transport equipment, and chemicals
- EU imports from India are dominated by machinery and appliances, chemicals, and fuels
Services trade has followed a similar upward trajectory, exceeding €66 billion between the EU and India. This includes more than €37 billion in EU imports and approximately €29 billion in exports. Over the last ten years, services trade has more than doubled, registering remarkable growth of 243%.
Key service sectors include:
- Telecommunications
- Computer and information services
- Professional and management consulting
- Transport services
Investment ties further underscore the depth of engagement. In 2024, the EU's foreign direct investment in India stood at over €132 billion, positioning the bloc as India's leading foreign investor.
Negotiation Journey and Future Prospects
The free trade agreement negotiations were relaunched in June 2022, alongside parallel discussions on investment protection and geographical indications. The trade talks have aimed to:
- Remove existing trade barriers
- Boost exports between the regions
- Open up services sectors
- Reinforce the economic foundation of the India-EU partnership
This comprehensive agreement represents not just an economic arrangement but a strategic alignment between two major global players committed to strengthening multilateral cooperation and economic resilience in an increasingly complex international landscape.
