Mother of All Deals’: India, European Union Near Landmark Free Trade Agreement

India and the European Union are on the verge of finalising a long-anticipated free trade agreement (FTA) that could create one of the world’s largest integrated markets, covering nearly two billion people and close to a quarter of global economic output. Senior European leaders have indicated that negotiations are in their final stages, with a formal announcement expected during high-level talks in New Delhi later this month.

European Commission President Ursula von der Leyen, speaking at the World Economic Forum in Davos, described the proposed agreement as historic in scale and ambition. She said the deal, often described by policymakers as the “mother of all deals,” reflects Europe’s intent to deepen economic ties with fast-growing regions and emerging global economic centres, particularly in the Indo-Pacific.

Von der Leyen, along with European Council President Antonio Costa, is scheduled to visit India from January 25 to 27. The visit will coincide with India’s Republic Day celebrations, where the European leaders are expected to be chief guests, and will also include an India–EU summit with Prime Minister Narendra Modi. Officials on both sides have suggested that the conclusion of FTA negotiations could be formally announced during this summit.

If finalised, the agreement would mark a major shift in India–EU economic relations. The European Union is currently India’s largest trading partner, with bilateral trade in goods reaching approximately USD 135 billion in the 2023–24 financial year. Policymakers expect the FTA to significantly expand trade volumes, reduce barriers, and improve market access across a wide range of sectors, including manufacturing, services, technology, and green industries.

Addressing global business leaders in Davos, von der Leyen said Europe is actively seeking partnerships with regions that are expected to drive economic growth in the coming decades. She noted that while work remains to be completed, the negotiations with India have reached a critical stage. According to her, the agreement would offer European businesses an early-mover advantage in one of the world’s most dynamic markets, while also supporting India’s integration into global value chains.

The timing of the proposed deal is significant. Both India and the EU are navigating an uncertain global trade environment marked by tariff disputes, supply chain disruptions, and shifting geopolitical alignments. Recent trade policy decisions by the United States have added to these uncertainties, prompting several economies to accelerate bilateral and regional trade arrangements as a way to safeguard economic interests.

Beyond trade liberalisation, the upcoming India–EU summit is expected to deliver a broader framework for cooperation. Officials have indicated that the two sides may unveil a comprehensive strategic agenda to guide bilateral relations from 2026 to 2030. This roadmap is likely to cover areas such as digital cooperation, clean energy, climate action, research and innovation, and people-to-people exchanges.

Defence and security cooperation is also set to feature prominently. Negotiators are reportedly close to finalising a Security and Defence Partnership aimed at enhancing coordination between Indian and European institutions. The proposed framework is expected to promote greater interoperability, joint initiatives, and industrial collaboration in the defence sector.

One key aspect of this partnership could be increased participation by Indian companies in European defence programmes, including the EU’s Security Action for Europe (SAFE) initiative. SAFE is a financial instrument designed to strengthen defence readiness across Europe by providing substantial funding support to member states. Access to such programmes could open new opportunities for India’s defence manufacturing and technology sectors.

In addition, India and the EU are expected to initiate talks on a Security of Information Agreement, which would facilitate the secure exchange of classified information. Officials say such an arrangement is essential for deeper industrial and defence cooperation, particularly in advanced and sensitive technologies.

India and the European Union have been strategic partners since 2004, but progress on a free trade agreement has been uneven. Negotiations were first launched in 2007 but were suspended in 2013 after both sides failed to bridge differences on market access, regulatory standards, and intellectual property issues. Talks were revived in June 2022 amid a renewed push to strengthen economic partnerships in a changing global order.

Since then, negotiators have worked through several rounds of discussions to narrow gaps and align expectations. While challenges remain, recent statements from senior officials suggest a shared political will to bring the process to a close.

As preparations for the January summit gather pace, expectations are high that the proposed FTA could redefine India–EU relations for the coming decade. If concluded, the agreement would not only deepen economic engagement but also signal a broader strategic alignment between two major democratic partners in an increasingly complex global landscape.