India and the European Union have finalised a long-pending landmark trade deal, both sides said on Tuesday, as they seek to hedge against fickle ties with the United States.

The deal is expected to double EU exports to India by 2032 by eliminating or reducing tariffs in 96.6 per cent of traded goods by value, and will lead to savings of 4 billion euros ($4.75 billion) in duties for European companies, the EU said.

The EU will cut tariffs on 99.5pc goods traded over seven years, with tariffs to be cut to zero on Indian marine goods, leather and textile products, chemicals, rubber, base metals and gems and jewellery, India’s trade ministry said in a statement.

“Yesterday, a big agreement was signed between the European Union and India,” Indian Prime Minister Narendra Modi said earlier.

“People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4bn people of India and the millions of people in Europe,” he said.

The accord would open up India’s vast and highly guarded market, with New Delhi slashing tariffs on cars to 10pc over five years from as high as 110pc, according to an EU statement, benefiting European automakers such as Volkswagen, Renault, Mercedes-Benz and BMW.

India is also slashing tariffs on alcoholic beverages like wines to 75pc immediately from 150pc, which would be lowered to 20pc gradually. Tariffs on spirits will be lowered to 40pc, the EU said.

The deal will also cut tariffs on a slew of EU goods coming to India including machinery, electrical equipment, chemicals and iron and steel, the EU said.

“Europe and India are making history today,” European Commission President Ursula von der Leyen said in a post on social media. “This is only the beginning.”

Trade between India and the EU stood at $136.5bn in the fiscal year through March 2025.

The formal signing of the India-EU deal would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter has said.

“We expect the deal to be implemented within a year,” the official added.

Flurry of trade deals

The agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.

During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.

The spate of deals underscores global efforts to hedge against trade with the United States as President Donald Trump’s bid to take over Greenland and tariff threats on European nations test longstanding alliances among Western nations.

An India-US trade deal collapsed last year after a breakdown in communications between the two governments.

Talks between India and the EU were relaunched in 2022 after a nine-year lull, and gathered momentum after Trump put tariffs on several trading partners, including a 50pc tariff on goods from India.

For India, the tariff cuts with the EU will lead to more exports in labour intensive sectors that will help partly offset the impact of US tariffs, said Ajay Srivastava, a former Indian trade official.

He said the deal will also give an immediate price advantage for EU products in India because of some relief from its high tariffs, for instance up to 110pc on cars.