India and the European Union have decided to finalize a long-awaited free trade agreement by the end of this year, alongside strengthening cooperation in areas like trade, technology, connectivity, and defense, as announced by Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen on Friday.
After their meeting, Modi stated that both sides have instructed their teams to conclude the bilateral trade deal within this year. He mentioned that several decisions were made to enhance and accelerate the India-EU partnership during the discussions.
Modi emphasized that the India-EU strategic partnership is based on mutual trust and shared democratic values. Von der Leyen added that the free trade agreement between the EU and India would be the largest of its kind globally.
The European Union is working to seal the deal with India, especially in light of potential U.S. tariffs. U.S. President Donald Trump has previously indicated plans to impose a 25% tariff on goods made in the EU.
Von der Leyen emphasized the need to be both pragmatic and ambitious, urging a realignment of priorities to address current realities. Speaking at a think tank event in New Delhi before her meeting with Modi, she expressed her full commitment to ensuring the successful delivery of their goals.
The European Commission President is currently in India for a two-day visit, which began on Thursday, accompanied by senior leaders from EU member nations.
India and the EU resumed discussions on their bilateral agreement in 2021, but there have been challenges in areas like market access for products such as cars and alcoholic drinks. The next round of negotiations is scheduled for March.
India and the EU have strong cooperation in various areas, including foreign policy, security, and technology. The EU is India’s largest trading partner, surpassing both the U.S. and China.
In the 2023-24 fiscal year, trade between India and the EU exceeded $130 billion, reflecting a 90% increase over the past decade. Additionally, more than 6,000 European companies operate in India.
Von der Leyen expressed that the EU and India have the potential to become one of the most important partnerships of this century.
She stated, “I want this visit to mark the beginning of this new era. Prime Minister Modi and I share the same vision. It’s time to elevate our EU-India Strategic Partnership to the next level.”
For India, the trade discussions have gained increased importance following President Trump’s decision to impose reciprocal tariffs on goods from countries, including India.
Last year, India signed a trade agreement with Iceland, Liechtenstein, Norway, and Switzerland—members of the European Free Trade Association—committing to $100 billion in investments. These investments are expected to be spread across sectors such as pharmaceuticals, machinery, and manufacturing.