After years of negotiations, the conclusion of a comprehensive trade agreement has been announced, which reduces tariffs, facilitates trade and investment, and strengthens strategic cooperation, including in the areas of security and defence. The deal follows increased tensions with the United States and competition with China. For New Delhi, the move reinforces the idea of ​​India at the centre of the economic and geopolitical balance between the West and the Global South.

New Delhi (AsiaNews/Agencies) – India and the European Union have announced the conclusion of negotiations for a comprehensive trade agreement, in response to trade tensions triggered by tariffs imposed by the US administration of Donald Trump.

According to a statement from the European Commission, the EU and India annually trade goods and services worth over €180 billion (US$ 215 billion). The agreement is expected to double European exports of goods to India by 2032, thanks to the elimination or reduction of tariffs on 96.6 per cent of the value of European shipments.

In a video message shared on X by Indian Commerce and Industry Minister Piyush Goyal, Prime Minister Narendra Modi said that the agreement offers “big opportunities” for both sides and covers an area that represents 25 per cent of global gross domestic product and a third of international trade.

“This will strengthen both trade and the global supply chain,” he said. Speaking in Hindi, Modi addressed India's manufacturing sectors: “I congratulate all those attached with sectors such as textiles, gems and jewellery and leather and shoes as this pact will be very helpful to all of you. This trade deal will not only empower manufacturing in India but will also further expand sectors linked to services.”

European Commission President Ursula von der Leyen also hailed the agreement as a historic moment. In an X post on Tuesday, she wrote: “Europe and India are making history today. We have concluded the mother of all deals.” She also stressed that the deal “is only the beginning” and that the two parties “will grow our strategic relationship to be even stronger.”

In concrete terms, the agreement provides for a significant reduction in Indian tariffs on some European products. Tariffs on European wines, currently at 150 per cent, will be reduced to 75 per cent and subsequently to 20 per cent, while those on olive oil will drop from 45 per cent to 0 per cent over a five-year period.

The agreement also represents a significant opportunity for European automakers and provides for a drastic cut in tariffs on cars imported from the EU, to as low as 10 per cent, significantly opening the vast Indian market to groups like Volkswagen and Renault for the first time.

The Indian market has been dominated by local and Asian manufacturers, particularly Suzuki and Hyundai, which offer affordable, compact models that are highly popular with consumers, while European manufacturers currently maintain a market share of less than 3 per cent.

India is the world's third-largest automotive market after the United States and China, and sales could exceed six million vehicles annually by 2030.

The agreement, however, maintains certain protections for sectors deemed sensitive by New Delhi, particularly agriculture and certain categories of small-engine vehicles, which will remain excluded or subject to specific safeguards.

The agreement goes beyond tariff reductions to include non-tariff measures aimed at facilitating trade and investment, such as simplified customs procedures, greater regulatory predictability, common rules on procurement and services, and tools to incentivise bilateral investments.

In parallel, India and the EU have also signed a Security and Defence Partnership. An EU briefing paper specifies that this is a partnership for “maritime security, defence industry and technology, cyber and hybrid threats, space and counterterrorism.”

The agreement was announced during von der Leyen and European Council President Antonio Costa's visit to New Delhi for a summit with Modi, and follows criticism from the Trump administration of the European Union for advancing the agreement with India.

In August, Trump imposed tariffs of up to 50 per cent on Indian products, adding an additional 25 per cent because of New Delhi's purchases of Russian oil.

“We have put 25% tariffs on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India,” US Treasury Secretary Scott Bessent told ABC News Sunday.

According to some commentators, however, the agreement between India and the EU was on the table long before the United States began imposing tariffs on its allies, particularly since Prime Minister Modi's first term, which began in 2014.

In 2019, India withdrew from the Regional Comprehensive Economic Partnership (RCEP), which included several Asian countries, fearing that it would primarily benefit East Asian economies, particularly China, worsening India’s trade deficit, putting pressure on sensitive sectors such as manufacturing and agriculture.

The Indian government deemed the safeguard clauses against an increase in low-cost imports insufficient, and the benefits in services and the mobility of skilled workers, areas that are central to the Indian economy, too limited.

Since then, India has focused on more targeted agreements with Western partners deemed economically complementary, including Great Britain and the European Union.

The ideal conditions for signing the agreement emerged in recent years. In addition to New Delhi's rapprochement with Beijing, both India and Europe are aiming to diversify their international relations, without abandoning economic and security ties with the United States.

For India, this is the most significant trade agreement ever negotiated with other countries, and it reinforces the belief at home that trade liberalisation is a key lever for the goal of becoming a developed country by 2047.

At the same time, it also reinforces the idea, repeatedly reiterated by Prime Minister Modi, that India is a bridge between the West and the global South, at the centre of global economic and geopolitical balances.

• india
• european union
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• narendra modi
• ursula von der leyen
• antónio costa