Deal with European Union represents 25% of global GDP and one-third of global trade: PM Modi

Deal with European Union represents 25% of global GDP and one-third of global trade: PM Modi

• India and EU sign major trade deal covering 25 percent of global GDP
• Deal enables free trade of goods, benefiting textiles, gems, and leather sectors
• India to cut tariffs on EU cars to 40 percent as part of the agreement

Did our AI summary help?

Prime Minister Narendra Modi on January 27 said "we have signed the mother of all deals with the European Union yesterday".

Speaking at the inauguration of India Energy Week, Modi said "the deal represents 25% of global GDP and one-third of global trade.

"Yesterday a big agreement was signed between the European Union and India. People are calling this the mother of all deals. This agreement will bring major opportunities for the public in India and Europe. This is a perfect example of a partnership between two major economies of the world. This agreement represents 25% of the global GDP and 1/3rd of global trade," said Modi.

"I congratulate textiles, gems and jewellery and leather sectors, that will benefit from the trade deal," said Modi.

India-EU FTA will strengthen trade, manufacturing, supply chain, added Modi.

Modi and European Commission President Ursula von der Leyen are expected to make a joint announcement at an India–EU summit in New Delhi, along with the details of the deal, later on Tuesday.

The formal signing of the India-EU deal would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter told Reuters.

"We expect the deal to be implemented within a year," the official added.

The deal would pave the way for free trade of goods between the bloc of 27 European nations and India, which together make up a quarter of the world's gross domestic product and a market of 2 billion consumers.

"It will be a balanced, forward-looking deal for better economic integration with the EU. The deal will propel trade and investment between both sides," said Commerce Rajesh Agrawal on January 26.

Trade between the two sides stood at $136.5 billion in the fiscal year through March 2025.

India and the EU pushed to close the deal after Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed to fast-track negotiations last year.

Two-way talks, relaunched in 2022 after a nine-year lull, gathered momentum after Trump imposed import tariffs on several trading partners, including a 50% tariff on goods from India.

Reuters reported on Sunday that India was planning to slash tariffs on cars imported from the EU to 40% from as high as 110% as part of the deal.

Negotiations excluded some sensitive farm and dairy items, the report said.

Modi further added that the country’s energy sector offers $500 billion opportunity and that India is creating an investor friendly environment for global collaboration.

The country has opened its exploration sector significantly and aims to invest $100 billion in the upstream exploration sector by 2030, Modi said.

India presently has the second-largest refining capacity with efforts to increase current capacity from 260 MMTPA to over 300 MMTPA by 2030.

The prime minister further added that the country is working on manufacturing vessels needed for LNG.

Modi called for industry stakeholders and global partners to "Make in India, Innovate in India, Scale with India, Invest in India".