India and EU Set to Finalize Historic Free Trade Deal by Year-End

India and the European Union (EU) have announced their commitment to finalize a long-awaited free trade agreement (FTA) by the end of 2025, marking a significant step in deepening their bilateral ties. In a joint statement following a meeting between Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, both leaders underscored the urgency to accelerate negotiations, particularly in trade, technology, connectivity, and defense.

During their discussions, Modi revealed that both sides have directed their teams to work toward concluding the free trade pact by the end of the year, with a focus on enhancing India-EU relations across various sectors. "The India-EU strategic partnership is natural. Its core is built on trust and shared democratic values," Modi remarked after the meeting, emphasizing the long-term potential of the collaboration.

Von der Leyen highlighted the monumental scale of the agreement, describing it as "the largest free trade agreement anywhere in the world." She stressed the importance of pragmatism and ambition in today's global context, particularly in light of potential tariffs that may arise from the U.S. under President Donald Trump's administration, which has signaled a 25% tariff on European goods. "It is time to be pragmatic and ambitious, to realign our priorities for the realities of today," von der Leyen said in her address to a think tank in New Delhi, just before her meeting with Modi. "You can count on my full commitment to ensure we can deliver this deal."

Von der Leyen’s two-day visit to India, accompanied by key EU member state leaders, is being seen as an important milestone in the strengthening of the EU-India partnership. The EU and India resumed negotiations for the FTA in 2021, but talks have faced challenges, particularly over market access for key sectors such as automobiles and alcoholic beverages. A new round of negotiations is scheduled for March.

The EU is India's largest trading partner, surpassing the U.S. and China. In the 2023-24 fiscal year, India’s exports and imports to the European bloc totaled over $130 billion, a remarkable 90% increase over the past decade. Furthermore, more than 6,000 European companies are currently operating in India.

Von der Leyen expressed confidence in the potential for the EU-India relationship to define the coming century, stating, "I want this visit to mark the beginning of a new era. Prime Minister Modi and I share the same vision – it’s time to elevate our strategic partnership to new heights."

For India, the outcome of the ongoing trade negotiations has gained even greater relevance following President Trump’s announcement of reciprocal tariffs on imports from several countries, including India.

India's recent trade agreement with Iceland, Liechtenstein, Norway, and Switzerland—members of the European Free Trade Association—also illustrates New Delhi’s growing importance in the global trade landscape. The deal, which includes a commitment to $100 billion in investments across industries such as pharmaceuticals, machinery, and manufacturing, further underscores India’s expanding role as a key trade partner.

As India and the EU move toward finalizing this pivotal trade deal, both parties are positioning themselves for a future of greater cooperation and mutual growth.