EU, India On Verge Of Historic Free Trade Agreement, Says Ursula Von Der Leyen

India and the European Union are on the cusp of finalising a “historic” free trade agreement (FTA) that could create a market of nearly two billion people and account for almost a quarter of the global GDP, European Commission President Ursula von der Leyen said on Tuesday.

Speaking at the World Economic Forum in Davos, von der Leyen said negotiations were in their final stages and expressed confidence that the long-awaited agreement would soon be concluded. “There is still work to do, but we are on the cusp of a historic trade agreement. Some call it the mother of all deals,” she said, adding that the pact would give Europe a first-mover advantage in one of the world’s fastest-growing regions.

Von der Leyen, along with President of the European Council Antonio Costa, will visit India from January 25 to 27 as chief guests at the Republic Day celebrations. During the visit, the two leaders will hold summit-level talks with Prime Minister Narendra Modi. The conclusion of the FTA negotiations is expected to be formally announced at the India–EU summit on January 27.

The European Union is currently India’s largest trading partner, with bilateral trade in goods reaching USD 135 billion in the 2023–24 financial year. The proposed FTA is expected to significantly deepen trade and investment ties, particularly at a time when global commerce is being disrupted by shifting tariff policies, including those of the United States.

Beyond trade, the summit is also expected to see the unveiling of a new defence framework pact and a joint strategic agenda to guide India–EU relations from 2026 to 2030. India and the EU have been strategic partners since 2004.

Negotiations for the FTA were first launched in 2007 but were suspended in 2013 due to differences over ambition and scope. Talks were revived in June 2022 amid renewed geopolitical and economic uncertainties.

The two sides are also expected to announce a proposed Security and Defence Partnership (SDP) aimed at enhancing defence cooperation and interoperability. The agreement could open avenues for Indian companies to participate in the EU’s SAFE (Security Action for Europe) programme, a €150 billion financial instrument designed to boost defence readiness among EU member states.

In addition, India and the EU are likely to launch negotiations on a Security of Information Agreement (SOIA), which is expected to strengthen industrial and defence cooperation between the two partners.