India and the European Union have agreed on a major trade deal that will cover nearly one-quarter of the world’s economy, Indian Prime Minister Narendra Modi announced on Tuesday.

The grand event along Kartavya Path in New Delhi featured a historic first: European Commission President Ursula von der leyen and European Council President Antonio Costa as chief guests, underscoring stronger India-EU ties ahead of free trade talks.

After almost 20 years of negotiations, the agreement will allow freer trade between India and the 27 countries of the EU, which is India’s largest trading partner. The deal means India will gradually open its huge market to European businesses, while Indian companies will gain easier access to Europe.

European Commission President Ursula von der Leyen described the agreement as a “historic” step for both sides.

Prime Minister Narendra Modi also tweeted to wish everyone the best and Ursula von der leyen said that “it is the honor of a lifetime to be Chief guests at the Republic Day celebrations.”

Trade between India and the EU reached $136.5 billion in the financial year ending March 2025, showing how important the relationship has already become.

This agreement is part of a wider push by both India and the EU to strengthen global trade ties. Recently, the EU also signed deals with Mercosur (South America), Indonesia, Mexico, and Switzerland, while India completed trade agreements with Britain, New Zealand, and Oman.

These moves come as countries try to reduce their dependence on the United States. Relations have been uncertain under U.S. President Donald Trump, who has imposed high tariffs on Indian goods and threatened European nations with trade penalties. A previous India-U.S. trade deal failed last year.

Officials say the India-EU agreement will be formally signed after legal checks, which may take five to six months, and it is expected to come into effect within a year.

 
Credit: Independent News Pakistan (INP)