EU and India on Brink of Landmark Trade Pact Covering 2 Billion People and One-Fourth of Global GDP

The European Union and India are poised to sign a landmark free trade agreement during the 16th India-EU Summit in New Delhi on January 27, a deal expected to create a combined market of two billion people and account for nearly 25% of global GDP. 

European Commission President Ursula von der Leyen announced the development at the World Economic Forum in Davos on Tuesday, calling the agreement “the mother of all deals.” 

Image Source: Pan European Foundation

She said the pact would give the EU a first-mover advantage with one of the world’s fastest-growing economies and reflect a strategic pivot toward Asia in light of deepening trade uncertainty with the United States.

Von der Leyen and European Council President Antonio Costa are scheduled to travel to India later this week to serve as chief guests at Republic Day celebrations and co-chair the summit with Indian Prime Minister Narendra Modi. 

Talks for the free trade agreement — first launched in 2007 and suspended in 2013 — were revived in 2022 and have since gathered momentum. India’s Commerce Ministry has confirmed that 20 of 24 chapters have been closed and both sides are expected to formally announce the conclusion of negotiations at the summit.

The deal comes amid global trade disruptions, including renewed threats of high tariffs from the United States on both Indian and European goods. 

Europe is ready to deliver on a powerful new agenda with India.

Today, the EU agreed to move forward with the signature of a new Security and Defence Partnership.

It will expand our cooperation in areas such as maritime security, counterterrorism and cyber-defence.

I look… pic.twitter.com/3SQQRovTYb

— Kaja Kallas (@kajakallas) January 21, 2026

The EU and India, both impacted by Washington’s protectionist stance, are increasingly aligned in seeking diversified trade ties and mutual strategic cooperation. The agreement is expected to strengthen market access for Indian textiles, footwear, and gems, while easing EU entry into India’s automobile and beverage sectors.

Von der Leyen emphasized the EU’s broader outreach strategy, saying Brussels is also negotiating new trade deals with Australia, the Philippines, Thailand, Malaysia, and the UAE. She reiterated that “Europe will always choose the world — and the world is ready to choose Europe.”

In addition to the free trade agreement, India and the EU are set to unveil a Security and Defence Partnership, expand cooperation under the EU’s SAFE defence initiative, and launch talks on a Security of Information Agreement aimed at bolstering industrial defence ties.

India and the EU have been strategic partners since 2004. The upcoming agreements are expected to define the contours of their bilateral relationship through 2030.