- A historic economic shift: The EU–India Free Trade Agreement creates the world’s largest free trade area, deepening integration between two major democracies and reducing tariffs at unprecedented levels.
- Geoeconomics meets geopolitics: The deal strengthens India’s economic alignment with the West while preserving its strategic autonomy, at a time of growing global trade fragmentation.
- From the Indo-Pacific to the Mediterranean: The agreement underpins IMEC and reinforces a shared security and connectivity vision linking the Indo-Pacific with Europe via the Mediterranean.
The European Union and India have announced the conclusion of more than two decades of negotiations, resulting in the creation of the world’s largest free trade area between the second- and fourth-largest global economies. The newly signed Free Trade Agreement is historic: it establishes an integrated market between two major democracies that together represent around 2 billion people and roughly 25 percent of global GDP.
Today, EU–India trade in goods and services exceeds €180 billion annually, supporting around 800,000 jobs within the Union. Under the new agreement, European exports are set to rise significantly, driven above all by the sharp tariff reductions endorsed by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. Overall, these tariff cuts are expected to generate estimated savings of around €4 billion per year on European products. In a geopolitical context in which tariffs are increasingly used as instruments of pressure—and amid Western concerns over India’s engagement with Russia and China within the BRICS framework—this agreement sends a strong signal of India’s commitment to the West and to democratic values, while preserving the strategic autonomy that has long defined its foreign policy.
Never before has India concluded a free trade agreement with such low barriers. The scale of liberalisation is evident in the drastic reduction of tariffs on automobiles, from 110 percent to 10 percent, and their full elimination on products such as automotive components, machinery, and chemicals. Italian pasta will also progressively reach zero-tariff status, as will olive oil.
But there is more. The EU–India Free Trade Agreement is strategically important for the success of IMEC, the multimodal maritime and rail corridor for trade, data, and energy, signed on the margins of the 2023 G20 hosted in New Delhi. Italy, under the government of Giorgia Meloni, was among the earliest signatories and promoters of the initiative. At the recent Italy–Germany summit held in Rome, German Chancellor Friedrich Merz reaffirmed Berlin’s intention to support Trieste as IMEC’s final European destination, in line with the position consistently advanced by Meloni. Trieste’s rail-maritime terminal uniquely connects the industrial core of Italy and Europe, more effectively than any other Mediterranean port.
Finally, alongside the trade deal, the EU and India signed a Security and Defence Partnership—an initial framework for cooperation between Brussels and New Delhi that will strengthen ties across multiple domains, from maritime security to the defence industry, as well as hybrid and cyber threats. This dimension is particularly significant, as it outlines the ambition to develop a shared security strategy stretching from the Indo-Pacific to the Mediterranean.
Giulio Terzi di Sant'Agata is a Senator of the Italian Republic and the President of the Senate's Permanent Committee on European Affairs. He is a former minister of Foreign Affairs of Italy and has been a career diplomat.
Vas is an Italian-Indian entrepreneur, advisor and analyst who founded the Indo-Mediterranean Initiative (cnky.in) in 2024. It was launched at the alter of Augustan peace, the Ara Pacis in Rome which eventually symbolised Pax Romana. He is the Chief Representative, Italy for the Indian Chamber of Commerce, India's oldest Chamber.
