India and the European Union announced Tuesday the “mother of all deals”, a huge trade pact to create a market of two billion people, reached after two decades of negotiations.EU chiefs and Prime Minister Narendra Modi hope the pact will help shield against challenges from the world’s two leading economies, the United States and China.The agreement will cut or eliminate tariffs on almost 97 percent of European exports, saving up to 4 billion euros ($4.75 billion) annually in duties, the 27-nation bloc said.”A mother of all deals,” Modi said 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 25 percent 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.”- ‘Increasingly insecure world’ -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 ($139 billion) in 2024, an increase of nearly 90 percent over the past decade, according to EU figures, with a further 60 billion euros ($69 billion) 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.- ‘Highest level of access’ -Tariffs on cars will be gradually lowered from a top rate of 110 percent to as low as 10 percent — with a quota of 250,000 vehicles — while duties on wines progressively go down from 150 percent to as low as 20 percent.Currently at 50 percent, tariffs on processed foods — including pasta and chocolate — will be eliminated, according to the EU.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”.For India, it would boost sectors including textiles, gems and jewellery, and leather goods, as well as the service sector, Modi said.The accord comes as both Brussels and New Delhi seek to open up markets in the face of US tariffs and Chinese export controls.”The unprecedented preferential access secured for over 99 percent of Indian exports is a game-changer for Indian industry,” said Chandrajit Banerjee, director general, Confederation of Indian Industry.India is on track to become the fourth-largest economy this year, according to International Monetary Fund projections.New Delhi, which has relied on Moscow for key military hardware for decades, has tried to cut its dependence on Russia in recent years by diversifying imports and pushing its own domestic manufacturing base.Europe is doing the same with regard to the United States.

The European Union and India announced Tuesday that they had struck a “historic” trade deal that Brussels hopes will see exports double to the Asian powerhouse.They had spent two decades negotiating but the return of US President Donald Trump and his hefty tariffs accelerated the push on both sides to seal a deal.Here is what Brussels and New Delhi agreed in what India’s Prime Minister Narendra Modi called the “mother of all deals”:- What benefits for the EU? -Indian tariffs on more than 90 percent of EU goods will be removed or cut.For example, India will progressively reduce levies to between 20 and 30 percent on European wines, down from 150 percent before the agreement.Beer tariffs will drop to 50 percent from 110 percent, while spirits will see future levies of 40 percent, down from up to 150 percent.India will also remove tariffs on EU olive oil — a major export from Spain, Italy and Greece — fruit juice, non-alcoholic beer and processed food including bread, pasta, chocolate and pet food. In a welcome move for one of the bloc’s biggest sectors and especially Germany, tariffs on cars will be gradually lowered from a top rate of 110 percent to as low as 10 percent — with a quota of 250,000 vehicles.And India will eliminate tariffs on aircraft — a potential boon for pan-European aerospace group Airbus — as well as cutting levies to zero on most machinery, medical equipment, chemicals and pharmaceutical products.- How does India benefit? -According to Brussels, the EU’s imports from India comprise mainly machinery and appliances, chemicals, base metals, mineral products and textiles.India said the EU would immediately eliminate duties on products making up the majority of its exports including textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery, and certain marine products.And the EU agreed to phase out tariffs for processed food items as well as arms and ammunition, among other goods.Steel was a thorny issue in negotiations since India is a major exporter. Brussels says the steel makes up seven percent of total Indian exports to the EU.Under the deal, India will benefit from a duty-free quota of 1.6 million tonnes, and New Delhi will relinquish its retaliation rights under the World Trade Organization, a senior EU official said.Another sticking point for India was the EU’s carbon border tax, which aims to ensure foreign producers pay a carbon cost similar to what European companies already pay under the bloc’s internal emissions trading system.Under the deal, the EU agreed to launch a technical dialogue on the tax if needed, and vowed not to treat any other EU partner better than India.The EU has also promised to make it easier for skilled Indian workers to work in the 27-country bloc, agreeing to a memorandum of understanding on mobility covering issues related to seasonal workers, researchers and students, the EU official said.- What doesn’t the deal include? -Sensitive agricultural products are excluded from the new deal.The senior EU official said there were no concessions for sugar, ethanol, rice, soft wheat, beef, chicken meat, milk powders, bananas, honey or garlic.He also said that unlike deals the EU has struck with other partners, there were no chapters on government procurement, on energy and raw materials, or on the liberalisation of investment in manufacturing sectors.India also opposed any chapter on “sustainable development where we focus on social rights and also environmental issues”, the official added.The two partners are discussing a separate agreement on Geographical Indications, the intellectual property rights that link a product’s qualities, reputation or features to its place of origin.This “will help traditional EU farming products sell more in India, by removing unfair competition in the form of imitations”, the EU executive said.India said the deal safeguarded sensitive sectors including dairy, cereals, poultry, soybean meal and certain fruits and vegetables.