BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - After nearly two decades of negotiations, the European Union and India have successfully concluded a landmark Free Trade Agreement.
The FTA was finalized at the 16th EU-India Summit in New Delhi, opening a new chapter in the EU-India Strategic Partnership.
Described by both European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi as 'the mother of all deals', the agreement will pave the way for India to open up its vast and guarded market to free trade with the EU and expand market access for Indian exports to Europe.
This is the most ambitious trade opening that India has ever granted to a trade partner. It will give a significant competitive advantage for key EU industrial and agri-food sectors, granting companies privileged access to the world's most populous country.
India will grant the EU tariff reductions that none of its other trading partners have received. For example, tariffs on cars are gradually going down from 110% to as low as 10%, while they will be fully abolished for car parts after five to ten years. Tariffs ranging up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will also be mostly eliminated.
The FTA will be formally signed only later this year after it is approved by the European Parliament and the European Council.
Trade between India and the 27-nation bloc, its biggest trading partner,is worth $136.5 billion.
The deal was announced after a meeting between Von der Leyen and Narendra Modi, also attended by European Council President António Costa.
Both the the European leaders were guests of honor at India's 77th Republic Day Parade celebrations on Monday.
Modi said, 'The agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe.'
'This agreement represents 25 percent of the global GDP and one-third of global trade,' Modi said while inaugurating the India Energy Week conference on Tuesday.
Von der Leyen said, 'In this increasingly volatile world, Europe chooses cooperation and strategic partnerships. Today, we have signed the EU-India Free Trade Agreement - the mother of all trade deals. We are opening an incredible market for seamless trade, investments and drastic reduction in tariffs for two billion people. And our Security and Defense Partnership will increase our resilience against all forms of threats. Today, we move forward together, committed to our truly transformative partnership.'
The major trade deal comes at a larger geopolitical context, especially as both European countries and India facing pressure from President Donald Trump. He has threatened to escalate the trade war with European allies for opposing a proposed U.S. acquisition of Greenland, while he imposed 50 percent tariffs on Indian goods, and an India-US trade deal collapsed last year.
One of the largest agreements of its kind globally, the FTA substantially reduces tariff and non-tariff barriers, cutting 4 billion euros in tariffs for exporters of all sizes and unlocking significant trade and investment opportunities.
Currently, 6,000 European companies operate in India - a figure that is set to increase under the new agreement. The agreement supports more integrated supply chains, trade diversification and new export opportunities for Indian and European businesses. Together, the EU and India leverage their strengths and reinforce their joint economic security. A dedicated press release on the EU-India FTA is available here.
On the margins of the Summit, President von der Leyen and Prime Minister Modi participated in the first ever EU-India Business Forum, engaging with business leaders to deepen private-sector engagement and advance shared economic priorities.
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