India and the European Union have concluded a long-delayed free trade agreement that will eliminate or sharply reduce tariffs on the vast majority of goods traded between the two sides, a move aimed at boosting bilateral commerce amid rising global trade tensions.

Under the agreement, tariffs will be eliminated or reduced on 96.6% of traded goods by value, a step the European Union said could double EU exports to India by 2032 and generate annual savings of around €4 billion ($4.75 billion) in duties for European companies.

The  the historic India-EU Free Trade Agreement was announced in New Delhi by Indian Prime Minister Narendra Modi, European Council President António Costa and European Commission President Ursula von der Leyen. 

EU Commissioner Maroš Šefčovič described the deal as a “win-win” agreement designed to boost growth and competitiveness in both economies. He said the pact creates a combined market of nearly two billion people and signals a clear commitment to openness and rules-based trade at a time of geopolitical uncertainty.

“At a time of rising geopolitical tensions and global economic uncertainty, we are making a deliberate choice — openness over protectionism, cooperation over fragmentation, and rules-based trade over unpredictability,” Šefčovič said.

The agreement builds on an already robust economic relationship, with annual trade between India and the EU exceeding €180 billion.

Indian businesses are also set to benefit, with 99% of Indian exports to the EU to be liberalised, opening new opportunities across the economy. Tariffs on key industrial sectors — including automobiles, machinery, chemicals and pharmaceuticals — will be largely eliminated, strengthening supply chains and improving competitiveness on both sides. New market access will also be created for agri-food producers, while sensitive sectors will remain protected.

Šefčovič said the agreement is expected to support job creation, noting that the current EU-India economic relationship already sustains nearly 800,000 jobs in the EU. Around 6,000 EU companies operating in India employ about 3.7 million people directly, with many more jobs supported along the value chain.

These EU companies generated around €186 billion in turnover in India in 2024 — roughly 5% of India’s economy — accounting for 6% of India’s exports and contributing more than €7 billion in taxes, according to EU figures. At the same time, Indian companies are expanding their footprint in Europe through increased investment and business activity.

“This agreement will take our relationship to an entirely new level,” Šefčovič said, adding that the focus now would be on ensuring that businesses, farmers and consumers benefit from the deal as quickly as possible.

Indian Prime Minister Narendra Modi welcomed the agreement, calling it a landmark moment in EU-India relations.

“Yesterday, a big agreement was signed between the European Union and India,” Modi said earlier. “People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe.”