Why EU–India FTA Is the Mother of All Deals — and How Trump Pushed It Forward

After nearly two decades of negotiations, the EU–India Free Trade Agreement (FTA) is closer to reality than ever before. What once appeared stalled by differences over tariffs, standards, and market access has now gained decisive momentum, positioning the deal as one of the most consequential trade agreements of this decade.

The breakthrough was underscored at the World Economic Forum in Davos, where Ursula von der Leyen described the pact as being on the verge of completion, calling it “the mother of all deals.” Her remarks reflect not just optimism, but a strategic shift driven by changing global geopolitics—and, ironically, by the trade policies of Donald Trump.

Two decades in the making

India and the European Union began FTA negotiations in 2007, but talks stalled in 2013 amid disagreements over agriculture, services, data protection, and regulatory standards. The revival came in 2022 as global supply chains were disrupted by pandemics, wars, and rising protectionism.

Momentum accelerated sharply in 2025 after von der Leyen visited India with the full College of Commissioners and both sides committed to concluding talks by the end of the year. Multiple negotiating rounds, high-level political engagement, and ministerial interventions—including Commerce Minister Piyush Goyal’s visit to Brussels—helped narrow gaps.

A formal announcement concluding negotiations is expected at the 16th India–EU Summit on January 27, with von der Leyen and Antonio Costa attending soon after India’s Republic Day celebrations.

Why Trump changed the equation

A major accelerant behind the deal has been Washington’s shift toward aggressive protectionism. Under Trump, the US imposed steep tariffs—reportedly up to 50% on Indian imports and baseline tariffs on European goods, including steel and aluminium. These moves jolted both India and Europe into seeking alternatives that reduce dependence on the US market.

Unlike the EU–India talks, negotiations on an India–US trade deal only began in 2025 and have already been marked by pressure tactics and impatience. The contrast has been stark: consensus-building with Brussels versus coercion from Washington.

In effect, Trump’s tariff-first strategy pushed India and the EU closer together, turning the FTA into a hedge against unpredictable US trade policy.

What India gains

The EU is India’s largest trading partner, with bilateral trade valued at $135 billion in FY24. An FTA would dramatically expand this relationship.

For India, the benefits include:

• Access to a unified market of 27 countries, boosting exports of pharmaceuticals, engineering goods, auto components, electronics, and chemicals

• Relief for labour-intensive sectors such as textiles, leather, jewellery, and garments that face higher EU tariffs than competitors like Bangladesh

• Greater mobility for professionals and stronger access for IT and services exports, reducing reliance on the US

• Supply chain diversification away from China, especially in renewable energy, electronics, and manufacturing

  

• Higher investment and technology transfer, strengthening India’s position in global value chains

With the International Monetary Fund projecting India’s growth at 7.3%, the EU sees India as a long-term growth engine rather than just a trade partner.

What Europe gains

For the EU, the deal opens doors to one of the world’s fastest-growing consumer markets.

European benefits include:

• Lower tariffs for key exports such as automobiles, aircraft, machinery, chemicals, and beverages

• A reliable manufacturing and investment destination as Europe seeks to reduce overdependence on China

• Stronger geopolitical influence in the Indo-Pacific and Global South

• Deeper cooperation on climate action, technology, and multilateral trade norms

With a combined GDP of over $22 trillion, the EU gains scale, while India gains sophistication—a rare win-win in modern trade.

Why this deal rattles Trump

The EU–India FTA directly undercuts Trump’s “America First” strategy. Once European firms gain preferential access to India’s massive market, US companies will find themselves at a disadvantage. This could create internal pressure within the US to rethink its hardline tariff approach.

Strategically, the deal accelerates a multipolar trade order, where major economies hedge against US unpredictability by building alternative alliances. It reduces Washington’s leverage, weakens tariff coercion, and signals that global trade can move forward without US dominance.

In that sense, Trump unintentionally played catalyst. His tariffs forced long-delayed decisions, nudged hesitant partners together, and revived India’s confidence in free trade on its own terms.

A defining moment

If finalised as expected, the EU–India FTA will bind two of the world’s most significant economic regions more closely than ever before. It represents scale, strategy, and sovereignty rolled into one agreement.

For India, it marks a shift from trade caution to trade confidence.
For Europe, it is a strategic recalibration.
For Trump, it is a reminder that coercion often produces unintended consequences.

And that is why this truly could be the Mother of All Deals.