‘Mother of all deals’: India–EU FTA close to completion, seen as major global trade milestone is worth a quarter of global GDP

The European Union (EU) is close to finalising a keenly awaited free trade agreement (FTA) with India, indicated European Commission President Ursula von der Leyen at the World Economic Forum (WEF) in Davos on Tuesday. She also signalled at the FTA being one of the most significant milestones for both economies in a very long time. 

“There is still work to do. But we are on the cusp of a historic trade agreement. Some call it the mother of all deals. One that would create a market of 2 billion people, accounting for almost a quarter of global GDP,” she said in her speech, focused on the EU’s plans to expand and de-risk its trade partnerships. 

How is India-EU FTA crucial? 

The scope of the proposed agreement is gigantic. With this agreement India, one of the world’s fastest-growing big economies, will significantly be linked with an economic bloc that is pivotal for global trade. Along with this, this agreement will also influence supply-chain flows in a new global economic era shaped by the decisions of big economies, majorly the US under President Donald Trump.  

India is crucial to the EU as part of its strategy to lessen dependence on China on one hand and growing ties with reliable partners on the other. The pact is beneficial to India as well for it will gain a deeper access to the European bloc, a 27-nation economic group, which has become its second-largest trading partner. With this, the FTA would boost India’s export competitiveness and support its plans to move up the manufacturing value chain. 

Trade talks regain momentum after decade-long pause 

Negotiations on the India–EU free trade agreement, first launched in 2007, remained stalled for almost a decade before gaining fresh momentum in 2022 amid renewed political commitment. Since its revival, the talks have progressed alongside the India–EU Trade and Technology Council, a mechanism designed to align cooperation on critical technologies, digital rules and supply-chain resilience.  

This dual-track approach has helped bridge differences on sensitive regulatory matters and expanded discussions beyond tariff-related issues.