In a historic move, India and the European Union (EU) have successfully signed a landmark Free Trade Agreement (FTA), a deal that Prime Minister Narendra Modi has described as the "mother of all deals." This agreement is expected to reshape global trade, manufacturing, and supply chains significantly, creating opportunities for businesses and investors in both regions.

The European Union, often abbreviated as EU, is a political and economic union of European countries that promotes peace, stability, economic cooperation, and shared prosperity among its members. The union allows for free movement of goods, services, capital, and people, while working together on policies related to trade, climate change, digital rules, agriculture, competition, and foreign affairs. The EU formally came into existence with the Maastricht Treaty in 1993, evolving from post–World War II efforts to ensure long-term peace and cooperation in Europe.

As of 2026, the European Union comprises 27 member countries, including Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, and Sweden. Together, these nations account for 25% of the global GDP and nearly one-third of global trade, underlining the strategic importance of the India-EU FTA.

Addressing the Indian Energy Week virtually, Prime Minister Modi emphasized that this India-EU free trade deal is a historic opportunity for both nations, benefiting 140 crore Indians and millions of Europeans. He highlighted that the agreement would open new doors for Indian businesses, youth, and investors, while reinforcing India’s position as a trusted global economic partner. The Prime Minister described the agreement as an example of coordination between two major economies of the world, creating confidence in global businesses and investors about India’s economic potential.

The India-EU FTA is expected to boost several sectors in India, including textiles, gems and jewellery, leather, footwear, manufacturing, and services, by promoting domestic production and expanding India’s fast-growing services sector. By facilitating smoother trade flows and investment opportunities, the FTA is set to strengthen global supply chains, which is particularly vital amid rising geopolitical uncertainties.

Bilateral trade between India and the EU already forms the backbone of their economic relations. During the fiscal year 2024-25, the total trade between India and the EU crossed USD 190 billion, with India exporting USD 75.9 billion in goods and USD 30 billion in services. Conversely, EU exports to India were USD 60.7 billion in goods and USD 23 billion in services. The FTA is expected to further enhance trade volumes, benefiting both economies and creating sustainable growth opportunities.

Negotiations for the India-EU FTA first began in 2007 and were revived in 2022. The conclusion of the agreement marks a decisive moment in India-EU relations, potentially redefining economic engagement between India and the 27-nation European bloc for decades. The deal complements India’s existing trade agreements with the UK and the European Free Trade Association (EFTA), strengthening India’s global economic partnerships.

Experts highlight that this FTA will provide Indian businesses access to the large European market, fostering opportunities in high-value sectors such as technology, services, manufacturing, and renewable energy. It is also expected to boost investments from European companies into India, creating jobs and driving economic development.

For India, the FTA not only opens doors for exports and business growth but also enhances competitiveness in the global market. For the EU, partnering with India strengthens its trade presence in Asia, providing access to a growing consumer base and diverse supply chain opportunities. The strategic implications of this FTA are significant, as it establishes a framework for deeper cooperation in areas such as climate action, digital trade, sustainable development, and technology exchange.

Prime Minister Modi’s announcement underlined the broader vision of India as a global economic leader capable of forging robust partnerships with the world’s largest economies. The FTA is expected to be transformational, benefiting Indian entrepreneurs, exporters, service providers, and investors, while also creating a more integrated global trade environment.

In summary, the India-EU free trade agreement represents a historic milestone in international trade, highlighting India’s growing role in global economic governance. By connecting two of the world’s largest economies, the FTA will enhance trade flows, boost investment, create jobs, and strengthen supply chains, ultimately contributing to shared prosperity for millions of people in both regions.

This agreement is more than a trade deal; it is a strategic partnership for growth, innovation, and long-term global economic stability, marking a new chapter in India-EU relations. With this landmark FTA, India moves closer to realizing its ambition of becoming a global economic powerhouse, while the European Union secures a reliable partner in Asia for sustainable trade and investment.

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