India–EU Trade Pact: Why It’s Called the “Mother of All Deals”

Why India-EU FTA Carries So Much Weight

The India–EU relationship is already large, and the trade numbers underline why an FTA is seen as pivotal.

In FY2024–25, India’s goods trade with the EU stood at about $136.53 billion, with exports of $75.85 billion and imports of $60.68 billion. This made the EU the largest goods market for India. India also recorded a goods trade surplus of $15.17 billion with the EU during the year.

Services are another major pillar. Services trade with the EU was valued at $83.10 billion in 2024, spanning areas such as telecommunications, IT, and business services.

Importantly, the EU accounts for nearly 17% of India’s total exports, offering Indian businesses a vast market where easier access under an FTA could materially change growth opportunities.

The Combined Economic Scale: India and EU Trade Pact

This is not a narrow bilateral agreement. It is a partnership between two large economic blocs.

The EU is a union of 27 countries, including France, Germany, Spain, Sweden, and Poland, with a collective population of about 45 crore. Together, India and the EU account for 191.3 crore people, or 23% of the global population.

On economic output, the two together recorded a nominal GDP of $23.41 trillion in 2024, representing 21% of global GDP, as per the World Bank. In global trade, they accounted for 33% of exports of goods and services, and 32% of imports.

That heft explains the label. A deal between entities that collectively represent this much of global consumption, production, and trade tends to reshape supply chains, standards, and competitive positioning well beyond the two partners.

Where India–EU Trade Stands Today

The EU is India’s second-largest trading partner, with trade in goods worth EUR 120 billion in 2024, or 11.5% of India’s total trade.

India’s exports to the EU are concentrated in:

• Machinery and appliances
• Chemicals
• Base metals
• Mineral products
• Textiles

Imports from the EU are led by:

• Machinery and appliances
• Transport equipment
• Chemicals
  

India’s exports to the EU have risen sharply over the past year, while the increase in imports has been marginal. In 2024, India exported EUR 71.3 billion of goods to the EU and imported EUR 48.8 billion from the EU, based on figures cited by the Indian Embassy and the European Commission.

Beyond Trade: The Investment and Corporate Linkages

The India–EU relationship is not limited to merchandise and services trade. According to the European Union, nearly 6,000 European companies operate in India, reflecting a deep commercial presence.

The EU’s importance is also visible in investment flows. The EU’s stock of foreign direct investment (FDI) in India rose from EUR 82.3 billion in 2019 to EUR 140.1 billion in 2023, positioning the EU as a leading foreign investor in India. In comparison, the stock of India’s FDI in the EU stood at EUR 10.2 billion.

Why the “Mother of All Deals” Tag Fits

The term “Mother of All Deals” is widely associated with the proposed India–European Union Free Trade Agreement (FTA). Senior leaders such as Prime Minister Narendra Modi, Commerce and Industry Minister Piyush Goyal, and European Commission President Ursula von der Leyen have used this phrase to emphasise the agreement’s sheer size and its broader strategic significance.

The phrase is not just about headline numbers. It reflects three realities already visible in the relationship:

1. Scale of market access: A bloc of 27 countries is not one market, but it operates with common rules that can unlock breadth and depth for exporters once barriers ease.
2. Trade plus services: Unlike many trade discussions that focus primarily on goods, India–EU commerce is already substantial in services, particularly in high-value areas like IT and business services.
3. Investment depth: With thousands of European firms operating in India and a rising EU investment stock, the agreement has implications not only for trade flows, but also for corporate strategy, supply chains, and long-term capital.