EU-India Trade Deal: European Commission President Ursula von der Leyen said negotiators had made substantial progress, with only final steps remaining before both sides can seal what she described as a potentially historic agreement.

The European Union (EU) and India are moving closer to finalising a free trade agreement, which could rank among the largest economic pacts ever attempted, hinted European Commission President Ursula von der Leyen at the World Economic Forum in Davos on Tuesday.

Her statements pointed to a deal, which has been years in the making and now appears to be approaching a decisive phase. “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, one that would create a market of 2 billion people, accounting for almost a quarter of global GDP,” she said, as describing the EU’s push to diversify trade ties and reduce strategic vulnerabilities.

Why This Agreement Carries Global Weight

The proposed pact carries a scale that few trade agreements can match. A formal economic bridge between one of the world’s fastest-growing major economies and a bloc that is central to global commerce would change supply chains at a moment when countries are re-evaluating how and where they trade.

For Brussels, India has emerged as a key partner in its effort to reduce dependence on China and broaden engagement with economies seen as reliable and long term. For New Delhi, access to the EU’s 27-member market, its second-largest trading partner, would support export growth and strengthen India’s push to climb higher in global manufacturing and services.

Talks Back In Fast Lane

Discussions on an India-EU free trade agreement began in 2007 and then lost momentum for almost a decade. The discussions were revived in 2022, backed by fresh political commitment on both sides. Since then, negotiations have advanced along with the India-EU Trade and Technology Council, a forum established to align cooperation on critical technologies, digital rules and supply-chain resilience.

This parallel engagement has helped narrow regulatory differences and expanded the scope of talks beyond tariffs, giving negotiators room to address newer economic realities.

Why The Deal Is Moving Fast

Geopolitical developments are adding urgency. The EU is moving to diversify away from concentrated dependencies, and India is positioning itself as a central player in redesigned global supply networks.

Trade numbers highlight the momentum. Goods trade reached 124 billion euro in 2023, and services trade, led largely by digital and IT services, is estimated at 60 billion euro. Officials on both sides believe a comprehensive agreement could unlock far greater potential, especially in clean energy, pharmaceuticals, advanced manufacturing and digital services.

Issues Still On The Table

Optimism from Davos has not erased the remaining challenges. European negotiators continue to seek tariff reductions on automobiles, wines and spirits, sectors India has traditionally protected to shield domestic industries.

India is pressing for improved conditions for the movement of skilled professionals, an issue that is sensitive within the EU because visa and mobility policies differ across member states.

Sustainability standards, access to public procurement and regulatory alignment are also under discussion. These issues are politically sensitive; and therefore, von der Leyen stressed that “there is still work to do”.

Her visit to India early next week is expected to be crucial. Diplomats view the trip as a chance to settle the most difficult questions at the political level and provide clear direction to negotiators. The timing is important, coming ahead of a planned India-EU leaders’ meeting later this month, where both sides aim to show tangible progress and possibly point to a breakthrough.

Why The Deal Matters

A final agreement would stand among the EU’s most consequential trade achievements in recent years and strengthen India’s integration into global supply chains.

It would strengthen flows of goods, services and investment, offer more predictable market access, expand cooperation on technology and standards and send a strong signal of strategic alignment at a time when global trade is being changed.

A combined market representing nearly a quarter of global GDP would immediately place the EU-India pact among the most influential trade agreements in the world, with ripple effects far beyond Europe and South Asia.