Ursula von der Leyen —who traveled to New Delhi with the president of the European Council, Antonio Costato sign the pact with the Indian Prime Minister, Narendra Modi— defines it as “the mother of all agreements”: it will give access to a market of 2,000 million consumers and will allow community exporters to save 4,000 million euros annually in tariffs.
India is one of the most difficult countries for any trade negotiations due to its extremely protectionist DNAbut the current geopolitical context marked by the aggressiveness of Donald Trump has opened a window of opportunity for Europe, according to community sources.
New Delhi’s turn towards Brussels responds in large part to its frustration after the repeated failures to close a trade agreement with the United States. The pact was very close on several occasions, but never materialized. In the end, Washington has ended up imposing tariffs of up to 50% on Indian products.
The Indian Government has experienced this setback as a real humiliation, not only from an economic point of view but also because of its symbolic significance, especially because Prime Minister Modi boasted of having a good relationship with Trump. Furthermore, India has traditionally looked much more to the US than to Europe, and this is reflected in migration patterns.
“This agreement will deepen economic ties, create opportunities for our people and will strengthen the partnership between India and Europe for a prosperous future“, wrote Narendra Modi on your X social network account in all official EU languages.
Without Trump’s tariff war, the trade agreement with India would not have been possible, according to community sources. Brussels and New Delhi launched negotiations in 2007, but the dialogue was suspended in 2013 and did not resume until 2022.
The authentic “turning point“occurred during the visit to New Delhi of the entire college of commissioners in February of last year, just after Trump’s return to the White House. It was then that both parties set the goal of closing the agreement before the end of 2025, a deadline that, against the odds, has been respected with a month to spare.
“The EU has gradually and increasingly realized the absolute need for diversify your business relationships“, point out the sources consulted. The objective is to reduce the risks derived from excessive dependence on countries such as China or Russia, but now also on the United States.
The pact signed by Von der Leyen with Modi represents the most commercial opening ambitious that India has ever granted to a trading partner, Brussels highlights. It will provide a “competitive advantage” to key EU industrial and agri-food sectors, giving companies privileged access to the world’s most populous country, with 1.45 billion people, and the fastest growing large economy, with an annual GDP of €3.4 trillion.
Among the most benefited sectors in the EU, the automobile industrywhose tariffs will be gradually reduced from 110% to 10%, with a quota of 250,000 vehicles per year.
For its part, the high rates of up to 44% in machinery22% in chemicals or 11% in pharmaceuticals.
The agreement eliminates or reduces often prohibitive tariffs (more than 36% on average) on agri-food exports of the EU, opening a huge market for European farmers, according to Brussels.
Among the most interesting products for Spanish exporters are also olive oil (whose tariff will be gradually reduced from 45% to zero) and wine (with a reduction from the current 150% to 20%).
Both parties have agreed exclude the most sensitive agricultural products from liberalization. Thus, the EU maintains its current rates on sensitive products such as beef, sugar, rice, chicken meat, milk powder, honey, bananas, common wheat, garlic and ethanol.
In this sense, the agreement with India is much less controversial than the one the EU has just closed with Mercosur —a bloc formed by Argentina, Brazil, Paraguay and Uruguay—, which has encountered frontal opposition from the primary sector throughout Europe.
The EU and India already trade goods and services worth more than €180 billion a year, supporting nearly 800,000 jobs in the EU. This agreement is expected double EU goods exports to India by 2032.
In parallel, India and the EU continue to negotiate a separate agreement on Geographical Indications (GI), which “will help traditional EU agricultural products sell more in India, by eliminating unfair competition in the form of imitations.”
The great obstacle that has prevented closing this pact is the recognition of the basmati ricea national symbol whose origin India claims, but which Pakistan also claims.
In New Delhi, India and the EU have also signed a Security and Defense Agreementwhich aims to ensure closer cooperation on shared priorities, such as maritime security, non-proliferation and disarmament, space, countering cyber and hybrid threats, and terrorism.
In order to quickly close this treaty, Brussels has turned a blind eye to India’s closeness to Russiaalthough Von der Leyen has asked Indian Prime Minister Narendra Modi to pressure Vladimir Putin to accept a ceasefire in Ukraine.
The trade agreement between India and the EU still needs to complete several formalities before it comes into force. In the coming months, the legal review and translation of the definitive texts, which have not yet been published, will be carried out.
Subsequently, the formal adoption procedure will begin by the EU Governments and the European Parliament, a process that is expected to take place throughout the second half of the year. If there are no setbacks, the pact could come into force in early 2027.