India-EU trade deal: ‘Successful India makes world stable,’ says EU chief

Ahead of the much-expected India-EU trade deal, currently being referred to as the “mother of all deals”, European Union Commission President Ursula von der Leyen on Monday (January 26) said that a “successful India” would lead to a "stable, prosperous and secure" world. Leyen is currently on a three-day visit to India for the India-EU summit talks with Prime Minister Narendra Modi, which is scheduled to be held on Tuesday.

"A successful India makes the world more stable, prosperous and secure. And we all benefit," Leyen stated in a post on X.

Strained EU-US ties over Greenland

Her remarks come at a time when ties between the EU and the US have come under strain following President Donald Trump’s repeated assertions of establishing US control over Greenland.

Also Read: From Viswaguru to labour supplier: Hidden cost of India-EU trade talks

India’s trade ties with the US are also strained with Trump’s move to impose 50 per cent tariffs on Indian goods entering the US, out of which 25 per cent is a penalty for New Delhi’s purchase of Russian oil, which Washington claims is being used by Moscow to fund its war in Ukraine.

However, recently, US Treasury Secretary Scott Bessent had indicated that the Trump administration may lift the 25 per cent penalty as India’s purchase of Russian oil had sharply decreased.

‘Historic trade agreement’

Earlier, Leyen, at the Economic Forum in Davos, had said that India and the EU were close to striking a "historic trade agreement" that would create a market of 2 billion people, which accounts for almost a quarter of the global GDP.

Also Read: As India, EU near free-trade agreement, here’s what’s at stake

"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. One that would create a market of 2 billion people, accounting for almost a quarter of global GDP," she said.

"And, crucially, that would provide a first-mover advantage for Europe with one of the world's fastest-growing and most dynamic continents. Europe wants to do business with the growth centres of today and the economic powerhouses of this century," added Leyen as quoted by NDTV.

The EU remains India’s largest trading partner, with bilateral goods trade reaching $135 billion in the 2023–24 financial year.

The backdrop

Negotiations for a free trade agreement between the EU and India began in 2007 but were put on hold in 2013 before being revived in 2022, reported NDTV.

Also Read: EU unveils new strategic agenda to deepen ties with India

As part of the talks, India is reported to be considering a sharp reduction in import duties on cars brought in from the EU, cutting tariffs to 40 per cent from levels that currently run as high as 110 per cent.

According to Reuters, the Indian government has agreed to an immediate tax cut on a limited number of vehicles from the 27-member bloc priced above €15,000 ($17,739). The levy is expected to be lowered further to 10 per cent over time, a move that would open up the Indian market more widely to European carmakers such as Volkswagen, Mercedes-Benz and BMW.