India and EU Sign Major Free Trade Agreement in Shift Away From US

India and the European Union signed a massive free trade agreement yesterday, allowing them to establish an extremely strong strategic partnership in the global shift away from the United States amid Donald Trump's tariffs.

The agreement, coined the "mother of all deals," is the largest deal in India's history– together, the sides' two-way trade totals $215 billion, and the number of Indians living in the EU exceeds 800,000.

The EU is currently the world's second-largest economy, while India is the fourth-largest. By establishing deals with China and the EU, India now holds a prime position to avoid American goods amid a 50% tariff from Donald Trump.

India is the EU's ninth-largest trading partner, making up just 2.4% of their total trade, but the EU is one of India's top three trading partners among the US and China. Due to this, the deal gives the EU a solid base to grow trade with a rapidly-growing nation, while providing India with the elimination of almost all export tariffs from one of their largest trading partners.

The deal will see India remove tariffs on 96.6% of incoming goods from the EU, including vehicles, wine, machinery, and agricultural exports, with around one-third of those reductions taking place immediately. The rest will be spread out over the next five to ten years, allowing the EU to double its exports to India by 2032.

On the other side, the EU will do away with levies on a staggering 99% of Indian exports by value– conversely, this means that the goods not included in the deal make up just 1% of Indian exports by value to the EU. The goods included in the agreement include major Indian industries like textiles, leather, gems, jewelry, electronics, tea, and coffee.

According to the European Union, the deal will save European manufacturers around $4.7 billion each year. On India's side, the industries impacted by the deal make up around $33 billion in total annual exports, and they were hit by the EU with levies of up to 26%. According to CNBC, Indian officials also confirmed that major job growth would arrive alongside the deal, mentioning that it could generate six to seven million new jobs in the textile sector alone.

The deal is expected to be signed in August, with the first tariff removals taking place in early 2027.

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Image credit to Reuters