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Addressing the Indian Energy Week virtually, Modi said the deal is being widely described as the “mother of all deals” and will open up new opportunities for businesses and citizens across India and Europe.
The PM said, “I am telling you about a big development. Yesterday a big agreement was signed between the European Union and India.”
PM Modi said the agreement covers about 25% of global GDP and about a third of global trade, underscoring its scale and economic importance.
“Europe and India are making history today. We have concluded the mother of all deals. We have created a free trade area of two billion people that will benefit both sides,” EU chief Leyen said on Twitter.
“This is only the beginning. We will further strengthen our strategic ties,” he said.
Europe and India are making history today.
We have concluded the mother of all deals.
We have created a free trade area of two billion people, which will benefit both sides.
This is only the beginning.
We will further strengthen our strategic relations. pic.twitter.com/C7L1kQQEtr
– Ursula von der Leyen (@vonderleyen) 27 January 2026
Promotion of trade, manufacturing and services
PM Modi said the agreement will complement India’s existing trade agreements with the United Kingdom and the European Free Trade Association (EFTA), as well as strengthen the global supply chain.
He said, “This is an excellent example of coordination between the world’s two economies. This agreement represents 25% of global GDP and one third of global trade.”
He said the FTA will be particularly beneficial for sectors like textiles, gems and jewellery, leather and footwear, and will also support growth in manufacturing and services.
“This free trade agreement will strengthen confidence in India for every business and every investor in the world,” Modi said in a virtual address.
It is important to note that the deal is being announced on January 27, but will be operational until 2027. Bilateral trade between India and the EU to cross $190 billion in 2024-25, with India exporting goods worth $75.9 billion and services worth $30 billion, 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.
Both the leaders were the chief guests at the 77th Republic Day celebrations and before the talks they paid tribute to Mahatma Gandhi at Rajghat.
According to PTI, von der Leyen said ahead of the summit, “A successful India makes the world more stable, prosperous and secure. And we all benefit.”
Beyond trade, the summit focused on defense and security cooperation, climate change, critical technologies, and the rules-based international order. According to news agency PTI, the two sides are expected to unveil a security and defense partnership, begin negotiations on an information security agreement and facilitate mobility arrangements for Indian workers in Europe.
Negotiations on an India-EU FTA were first initiated in 2007, suspended in 2013 and resumed in June 2022. While negotiations have ended, it could take at least six months for the deal to be formally signed after legal review by both parties.
US criticism of India-EU FTA
US Treasury Secretary Scott Besant criticized the India-EU FTA, saying that Europe is waging a war against itself.
Besant said that US President Donald Trump has worked for a settlement on the Russia-Ukraine conflict. “America has made a much greater sacrifice than the Europeans,” he said.
“We’ve imposed a 25% tariff on India for buying Russian oil. Guess what happened last week? The Europeans signed a trade deal with India,” Besant told ABC News.
“And to be clear once again, Russian oil goes into India, refined products come out, and Europeans buy refined products. They are financing a war against themselves,” he said, adding that under Trump’s leadership, “we will finally end the Russia-Ukraine war”.