India and the European Union have agreed on a huge trade deal creating a free trade zone of two billion people, European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi have said.
In a post on X during her visit to New Delhi on Tuesday, von der Leyen said the two parties were “making history today”.
“We have concluded the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit,” she added.
Modi said the landmark agreement, following nearly two decades of on-and-off negotiations, had been reached, hailing its benefits before a meeting with von der Leyen and European Council President Antonio Costa.
“This deal will bring many opportunities for India’s 1.4 billion and many millions of people of the EU,” he said.
The deal will cover about 25 percent of the global gross domestic product (GDP), Modi said, adding that India will get a boost in sectors including textiles, gems and jewellery, and leather goods.
The trade pact, which EU officials said was the most ambitious India had ever agreed, comes amid a push by Brussels and New Delhi to open up new markets in the face of tariffs imposed by the United States and Chinese export controls.
It will pave the way for India, the world’s most populous nation, to open up its huge, protected market to free trade with the 27-nation EU, its biggest trading partner.
The EU, which views India as an important market for the future, said European companies would benefit from so-called “first mover advantage” in the Indian market, while New Delhi sees Europe as an important potential source of technology and investment.
The EU said it expected its exports to India to double by 2032 as a result of the deal.
Bilateral trade between India and the EU in goods has already grown by nearly 90 percent over the past decade, reaching 120 billion euros ($139bn) in 2024, according to EU figures. Trade in services accounts for a further 60 billion euros ($69bn), EU data shows.
Under the agreement, tariffs on 96.6 percent of EU goods exports to India would be eliminated or reduced, EU officials said. The deal would save up to 4 billion euros ($4.74bn) a year in duties on European products, officials said.
Among the products that would have tariffs all or mostly eliminated were machinery, chemicals and pharmaceuticals.
Tariffs on cars would gradually reduce to 10 percent with a quota of 250,000 vehicles a year, officials said, while EU service providers would gain privileged access to India in key areas such as financial and maritime services. Tariffs on EU aircraft and spacecraft would be eliminated for almost all products.
Tariffs would be cut to 20-30 percent on EU wine, 40 percent on spirits, and 50 percent on beer, while tariffs on fruit juices and processed food would be eliminated.
Source: Aljazeera