India and the European Union (EU) yesterday announced the "mother of all deals”, a huge trade pact to create a market of 2bn people, reached after two decades of negotiations.
EU chiefs and Prime Minister Narendra Modi hope the pact will help shield against challenges from the world’s two leading economies, the US and China.
The agreement will cut or eliminate tariffs on almost 97% of European exports, saving up to 4bn euros ($4.75bn) annually in duties, the 27-nation bloc said.
"A mother of all deals,” Modi said yesterday in the capital New Delhi, where he met with European Commission president Ursula von der Leyen and European Council president Antonio Costa.
"This deal will bring many opportunities for India’s 1.4bn and many millions of people of the EU,” Modi said, adding the agreement "represents about 25% of global GDP, and one-third of global trade”.
The EU has eyed India - the world’s most populous nation - as an important market for the future.
"Europe and India are making history today,” von der Leyen said in a statement, a day after she and Costa were feted as guests of honour at India’s Republic Day parade.
"We have created a free trade zone of 2bn people, with both sides set to benefit.”
EU officials said the deal was the most ambitious India had ever agreed, and European companies would benefit from so-called "first mover advantage”.
Europe’s key agricultural, automotive and service sectors stand to gain.
But sensitive agricultural sectors, such as beef, rice and sugar whose inclusion in an earlier deal struck with South American bloc Mercosur sparked farmers’ anger in Europe, were left out of the agreement.
New Delhi sees the European bloc as an important source of much-needed technology and investment to rapidly upscale its infrastructure and create millions of new jobs.