India-EU Trade Deal: Trump Likely to Regret as India Secures ‘Mother of All Deals’

India is set to ink one of the largest trade deals in the world with the European Union (EU) today. Following this landmark agreement, U.S. President Donald Trump may find himself regretting past trade strategies, as India will no longer be solely dependent on a deal with the United States.

After 18 rounds of negotiations spanning four years, the path for a Free Trade Agreement (FTA) between India and the EU has finally cleared. The official announcement is expected today (27 January). This deal is poised to provide significant relief to Indian exporters in sectors such as textiles, leather and footwear, gems and jewellery, chemicals, and marine products by reducing import duties in the EU. Commerce Secretary Rajesh Agrawal confirmed that the deal has been finalized.

From India’s perspective, the agreement is balanced, and once formalities are completed, it will come into effect early next year. Currently, the average EU tariff on Indian exports stands at 3.8%, with marine products facing 26% and leather goods 17%. Conversely, India imposes an average tariff of 9.3% on EU imports, including 35.5% on automobiles, 10.4% on plastics, and 9.9% on pharmaceuticals.

EU’s Interests and Sensitive Sectors
A key issue in the FTA negotiations was the EU’s strict environmental regulations, which are yet to be fully resolved. The EU also sought tariff concessions on its car imports into India. On the other hand, India prioritized protection for its agriculture and dairy sectors. According to sources, both sides took each other’s sensitive concerns into account. Any sector that received higher concessions on one side was offset by protections or benefits in another sector. In 2024-25, bilateral trade between India and the EU totaled USD 136.53 billion, with Indian exports accounting for USD 75.85 billion.

The Largest Bilateral Deal Yet
The FTA encompasses a market of approximately 1.9 billion people, making it larger than the China-ASEAN FTA, which covers 10 countries but lacks a unified customs entity. In contrast, the EU functions as a single customs unit, making the India-EU FTA the largest bilateral trade agreement for India.