Prime Minister Narendra Modi is set to host the 16th European Union-India Summit in the national capital on Tuesday with President of the European Commission, Ursula von der Leyen, and visiting President of the European Council, Antonio Costa, to announce the ‘mother of all trade deals’.

According to Commerce Secretary Rajesh Agrawal, India and the EU have concluded negotiations on the much-awaited Free Trade Agreement (FTA) and the announcement of the conclusion of talks will be made at the 16th India-EU Summit.

The Summit will offer an opportunity to build on the EU-India strategic partnership and further strengthen collaboration across key policy areas such as trade, security and defence, the clean transition and people-to-people cooperation.

According to officials, the signing of the deal will take place in about six months after the legal scrubbing. The deal is expected to come into effect sometime next year.

The summit is taking place against the backdrop of the positive momentum in EU-India relations in recent years.

Describing the agreement as balanced and forward-looking, Agrawal noted on Monday that it would strengthen economic integration between India and the EU and significantly boost trade and investment flows.

The India-EU FTA is being seen as a major step in expanding India’s global trade footprint. The agreement could help soften the impact of high US tariffs by opening up wider opportunities in the European market, especially for Indian exports such as textiles and jewellery.

One of the most significant outcomes of the pact is the opening up of India’s automobile sector to European car manufacturers. Import duties on European vehicles are expected to be sharply reduced from the current 110 per cent to around 40 per cent -- making cars from companies like Volkswagen, Mercedes-Benz and BMW more affordable in the Indian market.

At present, European companies hold only about 4 per cent of India’s annual car market of 4.4 million units. The EU already plays a key role in India’s trade landscape. It accounts for around 17 per cent of India’s total exports, while exports to India make up about 9 per cent of the EU’s overseas shipments.

In the financial year 2024–25, India’s bilateral trade in goods with the EU stood at $136.53 billion, with exports worth $75.85 billion and imports at $60.68 billion. This made the EU India’s largest trading partner in goods. Trade in services between the two sides reached $83.10 billion in 2024.