India and EU Near Historic Trade Deal Ahead of Republic Day Summit

India and the European Union are on the verge of a historic trade agreement that would create a market of 2 billion people, European Commission President Ursula von der Leyen said on Tuesday, just days before her visit to Delhi. Speaking at the World Economic Forum in Davos, she noted that this market would represent nearly a quarter of the world’s GDP.

“I will travel to India. There is still work to do. But we are on the cusp of a historic trade agreement. Some call it the mother of all deals,” von der Leyen said.

Her remarks highlight the significance of the deal, coming at a time when US President Donald Trump has been leveraging tariffs against India and European countries to push them toward his preferred positions.

“It is time to seize this opportunity and build a new independent Europe,” she said, referring to current geopolitical shocks and the EU’s response as a 27-nation bloc.

Von der Leyen and European Council President Antonio Costa will visit India from January 25 to 27 as chief guests for Republic Day and will hold summit talks with Prime Minister Narendra Modi. The two sides are expected to announce the conclusion of negotiations on the long-awaited Free Trade Agreement at the India-EU summit on January 27.

Von der Leyen stressed that the deal would provide a first-mover advantage for Europe with one of the fastest-growing and most dynamic continents. “Europe wants to do business with the growth centres of today and the economic powerhouses of this century,” she said. “From Latin America to the Indo-Pacific and far beyond, Europe will always choose the world. And the world is ready to choose Europe.”

Currently, the EU is India’s largest trading partner, with bilateral trade in goods reaching $135 billion in the financial year 2023-24. The Free Trade Agreement is expected to significantly strengthen these ties. Negotiations for the deal first began in 2007 but were suspended in 2013 due to differences in ambition. Talks were relaunched in June 2022.

The ambitious FTA is being finalized amid growing concerns over Washington’s trade and tariff policies under Trump, which have affected both India and the EU. “The world may be very different today, without any question. But I believe the lesson is very much the same: that geopolitical shocks can—and must—serve as an opportunity for Europe,” von der Leyen said.

In addition to the trade deal, India and the EU are expected to announce a defence framework pact and a strategic agenda during the January 25-27 summit. The partnership between India and the EU has been in place since 2004, and the joint strategic vision will guide their relationship from 2026 to 2030.

Von der Leyen also addressed geopolitical challenges, including recent tensions over Greenland. “The seismic change we are going through today is an opportunity, in fact a necessity, to build a new form of European independence. This need is neither new nor a reaction to recent events,” she said. “We will only be able to capitalise on this opportunity if we recognise that this change is permanent.”

Regarding ties with the United States, von der Leyen said Europe considers Americans not just allies, but friends. “Plunging us into a dangerous downward spiral would only aid the very adversaries we are both committed to keeping out of the strategic landscape,” she said. She added that Europe must approach such issues strategically, particularly in the context of the Russia-Ukraine war.

“Just over a month from now, we will mark the fourth anniversary of Russia’s war of aggression against Ukraine. Four years on, Russia shows no sign of abating, no sign of remorse, no sign of seeking peace,” she said. “This must end. We all want peace for Ukraine. We recognise President Trump’s role in pushing the peace process forward, and we will work closely with the United States. We all agree that Ukraine must therefore be in a position of strength at the negotiation table.”