India and the European Union signed a “landmark” free trade agreement on Monday, known as the “mother of all deals,” Prime Minister Narendra Modi said on Tuesday while addressing the India Energy Week.

free trade agreement sign Modi said that the EU accounts for about 25% of global GDP and about one-third of global trade. Cooperation with the EU will also complement India’s agreements with the United Kingdom and the European Free Trade Association.

The agreement will create a market of 2 billion people as trade ties continue to deepen tested amid heightened geopolitical tensions.

“I congratulate my colleagues in various industries including textiles, gems and jewellery, leather and footwear. This deal will prove to be very supportive of these industries,” Modi said.

The India-EU summit is being held today and details of the agreement are expected to be announced after the summit.

For New Delhi, which has been facing the hardest hit areas punitive With U.S. tariffs, this deal could be a much-needed shot in the arm. Since Trump imposed 50% tariffs on Asian economies last August, it has been looking for alternative export markets and has struck trade deals with several countries.

It is India’s fourth major trade deal since the United States, India’s largest export market and main trading partner, imposed steep tariffs in August. Trade agreement signed with the UK., Oman and New Zealand.

According to the European Commission, trade in goods between India and the EU will exceed 120 billion euros (approximately $140 billion) in 2024, making New Delhi the EU’s largest trading partner. Machinery and electrical appliances, chemicals, base metals, minerals and textiles are New Delhi’s major exports to the EU.

India is the EU’s ninth largest trading partner, accounting for 2.4% of the EU’s total trade in goods in 2024, far behind major partners such as the United States (17.3%), China (14.6%) or the United Kingdom (10.1%). The EU’s main exports to India include machinery, transport equipment and chemicals.

European Commission President Ursula von der Leyen explain At the World Economic Forum in Davos on January 20, the EU’s goal was to “choose fair trade over tariffs; choose partnership over isolation; choose sustainable development over exploitation.”

In the nine months to December, India’s exports to the six major EU markets of the Netherlands, Germany, Italy, Spain, France and Belgium totaled $43.8 billion, while exports to the United States alone totaled $65.88 billion.

Experts say that while the India-EU deal is an important milestone, it will not replace the need for an India-US deal.

In 2024, India’s goods trade surplus with the United States will be US$45.8 billion, while the surplus with the EU will drop significantly to US$25.8 billion.