Picture This: The Mother of All Trade Deals

The European Union and India have agreed a free trade agreement (FTA) after negotiations that first started in 2007, with India referring to the FTA as “the mother of all deals.”

The deal will eliminate EU tariffs on 70.5% of Indian import lines and 49.6% of Indian tariffs on EU import lines immediately, with most of the remainder phased in over 10 years. The deal is likely to be at least 12 months away from enactment, with at least seven major steps of approval on the EU side while Indian approval is more direct.

The blocker on previous EU deal approvals, including its eventual deals with Mercosur and Canada, has been the agricultural sector. Agriculture accounted for 11.3% of total Indian exports in the 12 months to Oct. 31, 2025 compared with 24.3% of Mercosur’s. In this instance, sensitive products including meat, rice and sugar are excluded from the deal — which accounted for 4.4% of total Indian exports — improving the chances of its passage.

Key elements on the European side include plans to double EU goods exports to India by 2032 as a result of cutting tariffs as well as reducing non-tariff barriers. Services, labor standards and environmental cooperation also feature including specific terms for the EU’s Carbon Border Adjustment Mechanism.

The potential for increased exports is a similar motivator for the EU as it has been for the recent deal with Mercosur, while India diversifies its markets away from the US where 50% tariffs are still being applied and India’s export dependence is traditionally high.

The growth aspiration of the EU compares with “pre-deal” S&P Global Market Intelligence forecasts, which show that excluding the terms of the new deal, the EU exports to India are only expected to grow by 28.1% in inflation-adjusted terms in 2032 versus 2025 in real terms. India’s exports to the EU are forecast to grow by 26.5% over the same period, down from an 87.3% surge in the 2020 to 2025 period. 

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.