India Set to Strike World’s Largest Trade Deal with EU, Deals Another Blow to Trump

New Delhi / Brussels: India is on the verge of finalizing the world’s largest trade agreement with the European Union (EU), a development that could offset the economic impact of U.S. tariffs and H-1B visa restrictions.

According to Forbes, last week India’s Commerce and Industry Minister Piyush Goyal held high-level meetings with EU trade ministers in Brussels to finalize the free trade deal (FTA). Negotiations, which began in June 2022, are now in their final stages. Earlier, talks had been attempted in 2007 but were suspended in 2013 due to geopolitical concerns.

Strategic Imperatives
The deal comes at a critical time as U.S. tariffs have created challenges for Indian and European businesses alike. Both sides are also seeking to reduce dependency on China. For India, this means diversifying supply chains, while the EU aims to reduce reliance on Chinese imports, especially in critical sectors such as automotive and machinery. French President Emmanuel Macron noted in an interview with Les Echos that “China is attempting to penetrate the heart of Europe’s industrial and innovation model, historically centered on machine tools and automobiles.”

India’s rare earth production could also play a key role. Indian Rare Earths Limited (IREL) produces 1,300–1,500 tons of neodymium oxide annually, making India a crucial supplier for the EU, which is seeking to reduce dependence on Chinese raw materials under the Critical Raw Materials Act (CRMA).

Economic Benefits for India
The EU-India FTA is expected to deliver both short-term and long-term gains. In the short term, India’s real income could rise by $3.5–5.16 billion. Service exports from India to the EU could grow by around 20%, compared to just 1% currently. European car exports to India are expected to increase by 50%, as import duties on fully assembled vehicles could drop by over 60%. Labor-intensive sectors such as garments, textiles, gems, and jewelry are also likely to benefit significantly.

Over the past decade, trade in goods between India and the EU has increased by nearly 90%. The EU is India’s second-largest trading partner, accounting for $140 billion in merchandise trade in 2024—11.5% of India’s total trade. Meanwhile, India is the EU’s ninth-largest trade partner, representing 2.4% of the EU’s total trade.

During talks in New Delhi in February 2025, Prime Minister Narendra Modi emphasized that “strengthening and accelerating India-EU partnership” is central to shared democratic values and mutual trust.