India and EU agree on massive $27 trillion trade agreement

India and European Union Sign Free Trade Agreement After Decades of Negotiation

A free trade agreement has been signed by India and the European Union, marking a significant milestone after nearly two decades of intermittent negotiations. The deal was announced on Tuesday, coinciding with Republic Day celebrations in New Delhi.

The agreement covers approximately 2 billion people and represents a combined market of nearly $27 trillion, accounting for about 25 percent of the global gross domestic product (GDP). The EU’s European Commission President Ursula von der Leyen and European Council President Antonio Costa joined Indian Prime Minister Narendra Modi as honorary guests for Republic Day.

The deal is expected to reduce tariffs for both India and the EU. Key provisions include access to goods, services, and investments across the EU’s customs union, with 144 services subsectors available to India and 102 subsectors opened up by the EU.

According to trade experts, the agreement could give India an edge in several sectors, including textiles, pharmaceuticals, machinery, steel, petroleum products, and electrical equipment. The EU is providing access to these markets, while India is opening up its own services sector, including in financial, maritime, and telecommunications industries.

The final draft of the trade agreement must still pass legal scrutiny before becoming operational next year. Trade economists and former diplomats have praised the deal as “excellent” and a significant step towards consolidating India’s trade and economic relations with its largest trade partner.

Key figures have welcomed the agreement, with Indian Prime Minister Modi stating that it will bring major opportunities for the people of India and Europe. European Commission President Ursula von der Leyen described the deal as creating a “free-trade zone of two billion people.”

Source: Al Jazeera