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The free trade agreement (FTA) between India and the European Union (EU) has been termed “ mother of all deals”.
According to a commerce ministry official, this is one of the largest bilateral trade deals that has happened across the world.
The China-Asean trade deal is also amongst the largest, but Asean is a grouping of 10 different countries (Southeast Asian nations). They are not a customs union like the EU.
Asean members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. India also has a free trade agreement in goods with this grouping.
“So it’s a huge deal in that sense,” the official said.
The talks for the pact were concluded on Friday (January 23), and it was approved by the Union Cabinet on Saturday.
The scale of the pact is reflected in the following numbers: The deal touches approximately 1.9 billion people (1.4 billion in India and about 500 million in the EU).
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India and the EU account for 25 per cent of the global economy.
They make up 30 per cent of the world’s population.
The EU’s total imports of goods are USD 6.9 trillion in 2024. The EU’s services imports were USD 2.9 trillion.
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View AllIndia’s total goods imports were around USD 750 billion in 2024.
Together, they account for 11 to 12 per cent of global trade.
Out of the total global trade of USD 33 trillion, India and the EU account for USD 11 trillion.
Bilateral trade
It is a cornerstone of the India-EU relationship, with total trade surpassing USD 190 billion in FY 2025. India exported USD 75.85 billion in goods and USD 30 billion in services to the EU, while the EU exported USD 60.68 billion in goods and USD 23 billion in services to India.
India has a trade surplus of USD 15.17 billion in 2024-25.
The EU market accounts for about 17 per cent of India’s total exports, and the bloc’s exports to India constitute 9 per cent of its total overseas shipments.
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The 27-nation bloc is a major global trade player, exporting about USD 2.9 trillion and importing more than USD 2.6 trillion in goods annually.
India exported USD 437 billion in goods and USD 387.5 billion in services. It imported goods worth USD 720 billion and services worth USD 195 billion in 2024-25.
India’s major goods exports to EU in FY2025 included petroleum products (USD 15 billion); electronics (USD 11.3 billion — smartphone USD 4.3 billion); textiles (USD 1.6 billion — garments USD 4.5 billion); machinery, computer (USD 5 billion); organic chemicals (USD 5.1 billion); iron and steel (USD 4.9 billion), gems and Jewellery (USD 2.5 billion); pharma (USD 3 billion); auto parts (USD 1.6 billion); footwear (USD 809 million); and coffee (USD 775 million).
The main imports included machinery, computer (USD 13.0 billion); electronics (USD 9.4 billion — mobile phone parts-USD 3.7 billion, ICs USD 890.5 million); aircraft (USD 6.3 billion); medical devices, scientific instruments (USD 3.8 billion); gems and jewellery (USD 3 billion - rough diamonds USD 1.7 billion); organic chemicals (USD 2.3 billion); plastics (USD 2.3 billion).
India’s key services exports to the EU were other business services, telecommunication and IT, and transportation services. Imports included intellectual property services, telecommunication and IT.
Investment
The EU is also a major investor in India. India’s cumulative FDI inflows from the EU from April 2000 to September 2024 totalled USD 117.4 billion, and 6,000 EU firms are present in India. FDI from the EU accounted for over 16.5 per cent of cumulative FDI equity inflows from all countries.
India’s FDI outflows to the EU totalled about USD 40.04 billion from April 2000 to March 20
This trade pact would be India’s largest FTA in both economic size and regulatory scope.
As the EU is a customs union, the agreement would give India preferential access to all 27 EU countries under a single framework.
The EU includes France, Germany, Spain, Italy, Austria, Belgium, Bulgaria, Finland, Hungary, Ireland, the Netherlands, Portugal, Poland, Denmark, and Sweden.
“So if you look at the magnitude of this trade, it is high,” the official added.
(This is an agency story. Except for the headline, the story has not been edited by Firstpost staff.)
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