India–EU FTA close to completion, seen as major global trade milestone is worth a quarter of global GDP
The European Union is getting closer to finalizing the much-anticipated free trade agreement (FTA) with India. The scope of the proposed agreement is huge and will affect supply chain flows in the new global economic era shaped by the decisions of major economies.
India-EU FTA is close to completion
At the World Economic Forum (WEF) held in Davos on Tuesday, European Commission President Ursula von der Leyen stated that the European Union (EU) is close to finalizing the highly anticipated free trade agreement (FTA) with India. He also signaled that the FTA is one of the most important milestones for both economies in a very long time.
“There is still work to be done. But we are on the verge of a historic trade agreement. Some call it the mother of all agreements. An agreement that will create a market of 2 billion people and account for almost a quarter of global GDP,” he said in his speech, which focused on the EU’s plans to expand trade partnerships and reduce risks.
How important is the India-EU FTA?
The scope of the proposed agreement is enormous. With this agreement, India, one of the world’s fastest-growing major economies, will be significantly connected to an economic bloc that is vital for global trade. However, this agreement will also affect supply chain flows in the new global economic era shaped by the decisions of major economies, especially the United States under the administration of President Donald Trump.
India is vital for the EU as part of its strategy to reduce dependence on China while improving ties with reliable partners. The deal is also beneficial for India because it will give India deeper access to the European bloc, an economic group of 27 countries that has become its second largest trading partner. However, the FTA will enhance India’s export competitiveness and support its plans to move up the manufacturing value chain.
Trade talks regain momentum after a decade
Negotiations on the India-EU free trade agreement, first launched in 2007, stagnated for almost a decade before gaining new momentum in 2022 amid renewed political resolve. Since its revival, talks have progressed alongside the India-EU Trade and Technology Council, a mechanism designed to harmonize cooperation on critical technologies, digital rules and supply chain resilience.
This two-way approach helped bridge differences on sensitive regulatory issues and helped move discussions beyond issues related to tariffs.
