NEW DELHI: India and the European Union announced on Tuesday a huge trade pact to create a market of two billion people, reached after two decades of negotiations.

The agreement will cut or eliminate tariffs on almost 97 per cent of European exports, saving up to four billion euros ($4.75bn) annually in duties, the 27-nation bloc said.

“A mother of all deals,” Modi said on Tuesday in the capital New Delhi, where he met with European Commission President Ursula von der Leyen and European Council President Antonio Costa.

“This deal will bring many opportunities for India’s 1.4 billion and many millions of people of the EU,” Modi said, adding the agreement “represents about 25pc of global GDP, and one-third of global trade”.

The EU has eyed India — the world’s most populous nation — as an important market for the future.

“Europe and India are making history today,” von der Leyen said in a statement, a day after she and Costa were feted as guests of honour at India’s Republic Day parade. “We have created a free trade zone of two billion people, with both sides set to benefit.”

EU officials said the deal was the most ambitious India had ever agreed, and European companies would benefit from so-called “first mover advantage”.

Europe’s key agricultural, automotive and service sectors stand to gain.

But sensitive agricultural sectors, such as beef, rice and sugar whose inclusion in an earlier deal struck with South American bloc Mercosur sparked farmers’ anger in Europe, were left out of the agreement.

New Delhi sees the European bloc as an important source of much-needed technology and investment to rapidly upscale its infrastructure and create millions of new jobs. It also includes a security partnership, providing “new opportunities” for defence companies, Modi said.

“We are not only making our economies stronger — we are also delivering security for our people in an increasingly insecure world,” von der Leyen said, speaking alongside Modi after exchanging agreements.

“By combining these strengths, we reduce strategic dependencies, at a time when trade is increasingly weaponised,” she added.

Bilateral trade in goods reached 120 billion euros ($139bn) in 2024, an increase of nearly 90pc over the past decade, according to EU figures, with a further 60bn euros ($69bn) in trade in services.

Under the agreement, India is expected to ease market access, and European firms will get privileged access to the Indian financial services and maritime transport market, the bloc said.

Tariffs on cars will be gradually lowered from a top rate of 110pc to as low as 10pc — with a quota of 250,000 vehicles — while duties on wines progressively go down from 150pc to as low as 20pc.

Von der Leyen said she expected exports to India to double, and that the EU would “gain the highest level of access ever granted to a trade partner in the traditionally protected Indian market”.

Published in Dawn, January 28th, 2026