Amid growing momentum for a landmark trade agreement between India and the European Union, European Commission President Ursula von der Leyen stated that "a successful India makes the world more stable, prosperous, and secure". Von der Leyen, along with European Council President Antonio Costa, attended India's 77th Republic Day celebrations in New Delhi as chief guests.
Von der Leyen's remarks highlight the EU's increasing recognition of India's importance on the global stage, particularly as both sides are expected to announce the conclusion of protracted negotiations for a free trade pact at the India-EU summit on January 27. Commerce Secretary Rajesh Agrawal confirmed that India and the EU have completed negotiations on the free trade agreement and that the deal would be announced by the leaders of India and the EU. The actual deal will be signed once the language goes through legal scrubbing.
The EU chief's visit underscores the EU's commitment to strengthening ties with India and broadening its global trade horizons. During her address at the World Economic Forum in Davos, Von der Leyen stated that the EU is on the cusp of a historic trade deal with India, describing it as the "mother of all deals," creating a market of two billion people and accounting for almost a quarter of the global GDP.
The expected trade agreement, already dubbed the "mother of all deals" by India's Commerce and Industry Minister Piyush Goyal, is poised to significantly expand bilateral trade and boost Indian exports such as textiles and jewelry. Sources say that the FTA would help Indian exporters rebalance this trade as it entails several concessions for Indian goods.
In anticipation of the deal, India is reportedly planning to reduce tariffs on cars imported from the EU to 40% from as high as 110% for cars with an import price of more than 15,000 euros, with a further reduction to 10% over time. This move is expected to ease access to the Indian market for European automakers such as Volkswagen, Mercedes-Benz, and BMW. New Delhi has proposed slashing import duties to 40% immediately for about 200,000 combustion-engine cars a year. Battery electric vehicles will be excluded from import duty reductions for the first five years to protect investments by domestic players like Mahindra & Mahindra and Tata Motors in the nascent sector, and after five years, EVs will follow similar duty cuts.
The European Union is India's largest trading partner, with bilateral merchandise trade reaching $135 billion in the financial year 2023-24. The FTA is expected to further strengthen economic ties and provide a crucial advantage to Europe, one of the world's most dynamic and fastest-growing continents. Even EU Vice-President Kaja Kallas, who joined Leyen during Republic Day event, noted strong momentum for closer cooperation with India and that they were seizing it.
