Davos: European Commission President Ursula von der Leyen has declared that the European Union is "on the cusp" of finalising a historic trade agreement with India. Speaking on Tuesday, she described the impending pact as the "mother of all deals," positioning the 27-member bloc to secure a significant "first mover advantage" in the region.
The announcement comes amidst heightened global trade volatility, particularly concerning the United States. While India’s trade negotiations with the US remain uncertain following the imposition of a 50 per cent duty on Indian goods in August last year, Washington has also renewed threats of high tariffs on the EU over the Greenland dispute. This protectionist shift has prompted both Brussels and New Delhi to accelerate their partnership.
"Right after Davos, next weekend, I will travel to India," von der Leyen said, confirming that she and European Council President Antonio Luís Santos da Costa will be the chief guests at India's Republic Day celebrations. They are also scheduled to co-chair the 16th India-EU Summit on January 27. "There’s still work to do, but we are on the cusp of a historic trade agreement," she added.
Highlining the economic magnitude of the partnership, von der Leyen noted that the deal would link a market of two billion people, accounting for nearly a quarter of global GDP. She emphasised that Europe is keen to align with the "growth centres" of the century, specifically targeting the Indo-Pacific region.
Indian Commerce Minister Piyush Goyal has also echoed the significance of the agreement, stating last week that the deal, expected to be signed on January 26, will be comprehensive and address the sensitivities of both sides. Commerce Secretary Rajesh Agarwal recently confirmed that negotiators have already closed 20 of the 24 chapters involved in the pact.
A key driver behind the renewed urgency is the shared challenge posed by China. While the EU seeks to reduce reliance on Chinese dominance in critical technologies and manufacturing, Indian industry is looking for alternatives to navigate pricing challenges in sectors like solar energy.
The agreement has been decades in the making, having been originally launched in 2007 and abandoned in 2013 before talks resumed in July 2022. Under the proposed terms, India aims to gain market access for labour-intensive sectors such as textiles, gems, and jewellery, while the EU is seeking entry for its automobiles and beverages.