India and the European Union are on the verge of finalising a “historic trade agreement” that could create one of the world’s largest economic blocs, European Commission President Ursula von der Leyen said on Tuesday, signalling a major boost to bilateral ties ahead of a high-level summit later this month.

Speaking at the World Economic Forum (WEF) in Davos, von der Leyen said the proposed free trade agreement (FTA) would create a combined market of nearly two billion people, accounting for almost a quarter of global gross domestic product (GDP). She described the deal as potentially “the mother of all agreements”, underlining its strategic and economic significance for both sides.

Von der Leyen to visit India

Von der Leyen, along with European Council President Antonio Costa, is scheduled to visit India from January 25 to 27. The two leaders will attend India’s Republic Day celebrations as chief guests and hold summit-level talks with Prime Minister Narendra Modi on January 27. The visit is expected to culminate in the announcement of the conclusion of negotiations on the long-pending India-EU free trade agreement.

“There is still work to do, but we are on the cusp of a historic trade agreement,” von der Leyen said in her televised address. “This would provide a first-mover advantage for Europe with one of the world’s fastest-growing and most dynamic regions. Europe wants to do business with the growth centres of today and the economic powerhouses of this century.”

She added that the European Union was committed to deepening partnerships beyond its traditional markets. “From Latin America to the Indo-Pacific and far beyond, Europe will always choose the world. And the world is ready to choose Europe,” she said.

EU currently India’s largest trading partner

The EU is currently India’s largest trading partner, with bilateral trade in goods reaching $135 billion in the 2023–24 financial year. The proposed FTA is expected to significantly expand trade and investment flows, while also deepening cooperation across a range of sectors at a time when global trade is facing uncertainty amid tariff-related disruptions.

Beyond the trade pact, India and the EU are expected to unveil a defence framework agreement and a new strategic agenda at the summit. The two sides are also likely to announce a joint comprehensive strategic vision for the period 2026–2030, aimed at strengthening cooperation in areas ranging from security and defence to technology and industrial collaboration.

Ursula von der Leyen

EU, India on cusp of ‘historic trade agreement’: Ursula von der Leyen