NEW DELHI, India: In a landmark deal that would affect at least two billion people across two continents, India and the European Union reached a free trade agreement after nearly two decades of negotiations on January 27.

"This agreement will bring major opportunities for the people of India and Europe," Indian Prime Minister Narendra Modi said in a virtual address to an energy conference. "It represents 25 percent of the global GDP and one-third of global trade."

The accord was described by European Commission President Ursula von der Leyen as the "mother of all deals."

The deal could be officially signed later this year after legal checks and approval by the Indian and European Parliaments, and Indian Minister of Commerce and Industry Piyush Goyal hoped it would take effect by the end of this year.

The negotiations for the India-EU deal received a new impetus after U.S. President Donald Trump's strong-arm trade tactics, including threats to impose punitive tariffs on European allies over their objections to his efforts to take control of Greenland.

The accord will see free trade on almost all goods between the EU's 27 members and India, covering everything from textiles to medicines. It will reduce the high import taxes for European wine and cars.

India and the European Union also agreed to work more closely on defense and security, and to conclude a separate agreement to make it easier for skilled workers and students to move between the two. This shows their partnership is not just about trade.

At a joint press conference in New Delhi, Prime Minister Narendra Modi said the deal with the EU will help bring stability to the world amid global uncertainty.

President von der Leyen said Europe and India had made history by completing a huge deal that benefits both sides. She later said it was a partnership between two major powers that helps both, and that working together is the best way to solve global problems.

The deal will more closely connect their supply chains and increase joint manufacturing. It will cut about 4 billion euros in taxes on exported goods each year and is expected to create millions of jobs in both India and Europe.

India will cut or remove taxes on about 97 percent of goods it buys from the EU. The EU will also reduce taxes on nearly 99 percent of goods it buys from India, but in stages.

Indian industries that will benefit include textiles, clothing, engineering goods, leather, handicrafts, footwear, and seafood. EU industries that will benefit include wine, cars, chemicals, and medicines.

There will be limits (quotas) on some items, such as cars, wine, and whisky, and taxes on these will be reduced.

Taxes on EU-made cars in India will gradually drop from 110 percent to as low as 10 percent, and taxes on car parts will be removed after five to 10 years. High taxes on machinery, chemicals, and medicines will also be mostly removed.

Taxes on premium European wine in India will fall from 150 percent to 20 percent.

India has kept dairy products like milk and cheese, as well as some grains, out of the deal to protect local farmers. The EU will not reduce taxes on Indian sugar, meat, poultry, and beef.

India wants to sell more to other countries to reduce the impact of higher U.S. taxes, including extra taxes because India buys oil from Russia. For the EU, the deal gives better access to one of the fastest-growing big economies and helps European companies depend less on risky markets.

An expert said this is the biggest and most detailed trade deal India has ever signed, and it gives European companies an early advantage in the Indian market.

Trade between India and the EU stood at US$136.5 billion in 2024-2025. The two sides hope to increase that to about $200 billion by 2030, Indian officials said.