Source The Hindu
DAVOS, Switzerland – Addressing a global audience at the World Economic Forum (WEF) on Tuesday, European Commission President Ursula von der Leyen declared that the European Union and India are nearing a breakthrough on a historic free trade agreement (FTA).
Describing the pact as the “mother of all deals,” von der Leyen signaled that years of stop-start negotiations are finally entering their final phase. The deal, once finalized, would link the world’s largest democratic trade bloc with its most populous nation, creating a combined market of 2 billion people and accounting for nearly a quarter of global GDP.
“There is still work to do. But we are on the cusp of a historic trade agreement,” von der Leyen told world leaders and CEOs in Davos. “One that would create a market… accounting for almost a quarter of global GDP.”
A Strategic Pivot Amid Global Volatility
The announcement comes at a critical geopolitical juncture. With rising protectionism and trade friction between major powers—including recent tariff tensions involving the United States—both Brussels and New Delhi are eager to diversify their economic dependencies.
For the EU, the deal is a cornerstone of its “de-risking” strategy, aimed at reducing reliance on China and securing supply chains with trusted partners. For India, the FTA promises enhanced access to the 27-nation bloc, its second-largest trading partner, particularly in sectors like IT services, textiles, and manufacturing.
Key Highlights of the Forthcoming Summit
The momentum from Davos is set to carry directly into high-level diplomatic engagements in New Delhi next week.
Republic Day Honor: President von der Leyen and European Council President Antonio Costa will travel to India as Chief Guests for the 77th Republic Day celebrations.
Final Breakthrough: The two sides are expected to officially announce the conclusion of negotiations at the India-EU Summit on January 27.
Beyond Trade: In addition to the FTA, officials are likely to unveil a comprehensive defense framework and a strategic security agenda for 2026–2030, covering critical minerals, green energy, and maritime security.
Remaining Hurdles
While the rhetoric in Davos was overwhelmingly positive, von der Leyen noted that “some steps are still pending.” Historically, sticking points have included EU demands for sustainability and labor standards, as well as India’s concerns regarding the Carbon Border Adjustment Mechanism (CBAM)—a carbon tax on imports like steel and cement that took effect on January 1, 2026.
Despite these challenges, Indian Commerce Minister Piyush Goyal echoed the optimism, stating earlier this month that the agreement would be a “win-win” that avoids direct competition by focusing on complementary strengths.
