India-EU trade deal: Why New Delhi could be the ‘perfect’ partner for Europe | EXPLAINED | India News
India-EU trade deal: In a major move to strengthen relations between the world’s two most important powers, India and the European Union (EU) are set to deepen cooperation through a landmark Free Trade Agreement (FTA).
India-EU FTA negotiations concluded on Monday, when India celebrated its 77th Republic Day, and the agreement will come into force next year. Subsequently, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen on Tuesday jointly announced the conclusion of the India-EU Free Trade Agreement at the 16th India-EU Summit held during the European leaders’ visit to India.
This partnership aims to enhance strategic cooperation and the signing of this agreement positions India and the EU as partners committed to open markets, predictability and inclusive growth.
Add Zee News as Preferred Source
On the economic front, attention is on the EU-India FTA. When implemented, it will create one of the world’s largest trade areas involving billions of people.
Why is India’s partnership critical for the EU?
India’s increasing role on the global stage has made its partnership particularly critical for the EU, especially given the current uncertainties in international geopolitics.
Europe faces numerous challenges, including the ongoing Russia-Ukraine war, pressures from China, and unpredictability in US foreign policy; This has been highlighted in the past by threats of high tariffs and unconventional moves such as the Greenland issue under US President Donald Trump.
In this context of global volatility, India offers a more stable and reliable trading partner. Its consistent economic growth and commitment to infrastructure development make it an attractive target for investment and long-term cooperation.
India’s import and export game
According to data provided by the Ministry of Commerce and Industry, India’s total exports (total of Goods and Services) for December 2025 are estimated at US$ 74.01 billion. Meanwhile, total imports for December 2025 are estimated to reach US$80.94 billion, registering a positive growth of 6.17 percent.
(Note- The Ministry announced that the latest data announced by the Reserve Bank of India (RBI) for the services sector is for November 2025. Data for December 2025 is an estimate.)
According to government data, India-EU bilateral services trade increased steadily between 2019 and 2024; India’s exports increased from 19 billion Euros to 37 billion Euros, and EU exports to India increased to 29 billion Euros.
India’s economic growth and contribution to the world economy
Speaking on the eve of India’s Republic Day 2026, President Droupadi Murmu highlighted the strength of the Indian economy and described it as the fastest growing major economy in the world.
“India is recording continuous economic growth despite global uncertainties. We are moving towards our goal of becoming the world’s third largest economy in the near future. We are rebuilding our economic power on a much larger scale by investing in the creation of world-class infrastructure.”
FTA key sectors
Commerce Minister Piyush Goyal called the agreement the “mother of all agreements” and in a post on X shared an image explaining which sectors of India will benefit from this free trade agreement.
According to the Ministry of Commerce and Industry, the India-EU Free Trade Agreement will strengthen labour-intensive sectors, including textiles, ready-made garments, leather, footwear, seafood, gems and jewellery, handicrafts, engineering products and automobiles, and reduce customs duties on exports worth approximately US$ 33 billion to zero by 10 per cent upon entry into force of the Agreement.
The combination of India’s economic stability, strategic location and growth potential offers Europe a reliable partner amid global uncertainty. Unlike other regions facing geopolitical tension, India offers a market that promises both stable trade relations and minimal strategic risks.
