India-EU FTA: PM Modi, Ursula Leyen announce 'mother of all trade deals', draw US ire

Prime Minister Narendra Modi and European Commission chief Ursula von der Leyen announced that India and the European Union have concluded negotiations on a long-awaited free trade agreement (FTA) on Tuesday, January 27, describing it as a major milestone for global commerce and bilateral ties.

Addressing the Indian Energy Week virtually, Modi said the deal was being widely described as the “mother of all deals” and would open up fresh opportunities for businesses and citizens across India and Europe.

"I am informing you about a big development. Yesterday, a big agreement was signed between the European Union and India," the PM said.

The agreement accounts for around 25% of global GDP and nearly one-third of global trade, underlining its scale and economic significance, PM Modi said.

Taking to X (formerly Twitter), EU chief Leyen, said, "Europe and India are making history today. We have concluded the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit.

"This is only the beginning. We will grow our strategic relationship to be even stronger," she added.

Europe

and India are making history today.

We have concluded the mother of all deals.

We have created a free trade zone of two billion people, with both sides set to benefit.

This is only the beginning.

We will grow our strategic relationship to be even stronger. pic.twitter.com/C7L1kQQEtr

— Ursula von der Leyen (@vonderleyen) January 27, 2026

Boost to Trade, Manufacturing and Services

PM Modi noted that the agreement would complement India’s existing trade pacts with the United Kingdom and the European Free Trade Association (EFTA), while also strengthening global supply chains.

"This is an excellent example of coordination between two economies of the world. This agreement represents 25% of the global GDP and one third of the global trade," he said.

He added that the FTA would be particularly beneficial for sectors such as textiles, gems and jewellery, leather and footwear, while also supporting growth in manufacturing and services.

"This free trade agreement will strengthen confidence in India for every business and every investor in the world," Modi saidin the virtual address.

It is important to note that the deal is being announced on January 27 but will be operationalised by 2027. The bilateral trade between India and the EU crossed $190 billion in 2024–25, with India exporting $75.9 billion in goods and $30 billion in services, while EU exports to India stood at $60.7 billion in goods and $23 billion in services.

India-EU Summit and strategic cooperation

PM Modi hosted European Commission President Ursula von der Leyen and European Council President Antonio Costa for a high-level summit in New Delhi on Tuesday, January 27.

The two leaders were chief guests at the 77th Republic Day celebrations and paid tribute to Mahatma Gandhi at Rajghat ahead of the talks.

"A successful India makes the world more stable, prosperous and secure. And we all benefit," von der Leyen said ahead of the summit, according to PTI.

Beyond trade, the summit focused on defence and security cooperation, climate change, critical technologies and the rules-based international order. The two sides are expected to unveil a Security and Defence Partnership, initiate talks on a Security of Information Agreement, and facilitate mobility arrangements for Indian workers in Europe, as per news agency PTI.

Negotiations on the India-EU FTA were first launched in 2007, suspended in 2013, and relaunched in June 2022. While negotiations have concluded, formal signing of the deal may take at least six months following legal review by both sides.

US criticism of India-EU FTA 

US Treasury Secretary Scott Bessent criticised the India-EU FTA stating that the Europe was buying a war against itself.

Bessent said that US President Donald Trump has worked to negotiate a settlement on the Russia-Ukraine conflict. "The US has made much bigger sacrifices than the Europeans," he said.

"We have put 25% tariffs on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India,” Bessent told ABC News.

"And just to be clear again, the Russian oil goes into India, the refined products come out, and the Europeans buy the refined products. They are financing the war against themselves,” he said, adding that under Trump's leadership, “we will eventually end” the Russia-Ukraine war.