NEW DELHI: India and the European Union reached a historic free trade agreement aimed at bolstering economic and strategic ties, with officials announcing the landmark deal on Tuesday after nearly two decades of negotiations. Dubbed by the head of the EU’s executive branch as the “mother of all deals,” this agreement has the potential to impact nearly 2 billion people around the world. However, it is expected to take several months before the new trade terms take effect.

The accord comes at a crucial time when both India and the EU are facing trade challenges from the United States, which has imposed steep import tariffs that disrupt existing trade flows. Indian Prime Minister Narendra Modi referred to this new partnership during a virtual address, emphasizing that “this agreement will bring major opportunities for the people of India and Europe,” as it represents a significant portion of global GDP and trade.

The free trade deal promises to eliminate tariffs on almost all goods exchanged between the EU's 27 member states and India. This encompasses a wide range of products, including textiles, medicine, wine, and automobiles. Additionally, India and the EU have set a framework for enhanced defense and security cooperation, along with provisions for easing mobility for skilled workers and students, indicating that the partnership extends beyond mere commerce.

The negotiations were notably accelerated by U.S. President Donald Trump’s aggressive trade policies, which have prompted Europe and India to seek stronger alliances in the face of economic pressure. Modi stated, “Europe and India are making history today,” further underscoring the importance of this partnership in stabilizing the international economic system during tumultuous times.

Expected benefits of the deal include annual tariff reductions of up to 4 billion euros ($4.7 billion) for exporters and job creation for millions within both economies. While India prepares to lower tariffs on 96.6% of EU exports, the EU will reciprocate with similar phased tariff reductions. Key Indian sectors like textiles and engineering are poised to benefit, while the EU stands to gain in areas such as automotive and pharmaceuticals.

However, not all sectors are included in the agreement. India has kept dairy products and cereals off the table due to domestic concerns, while the EU has maintained restrictions on Indian sugar and meat imports. A formal signing of the deal is anticipated later this year, contingent on the legal review and approval from the European Parliament, marking a significant step toward a stronger India-EU partnership.