New Delhi, Jan 25 (NationPress) India and the European Union are poised to declare the successful completion of negotiations on a long-anticipated free trade agreement on January 27, a pact that leaders from both regions have characterized as the ‘mother of all deals.’

This agreement, which has been in negotiation for over a decade, is viewed as a pivotal advancement in strengthening economic relations between the two areas at a time of increasing global trade unpredictability, according to reports.

A research note by Emkay Global dated January 25 indicates that a comprehensive free trade agreement could substantially enhance India’s trade stature with the European Union.

It is projected that the deal could expand India’s trade surplus with the EU by over $50 billion by FY31. Additionally, it might elevate the EU’s share in India’s total exports to approximately 22–23 percent, up from 17.3 percent in FY25, offering a significant boost to India’s export growth.

Currently, India makes up only about 0.8 percent of the EU’s export market, but this agreement is becoming increasingly vital for Europe as well.

In recent years, Europe’s trade balance with India has undergone a dramatic change, with the EU transitioning from a trade surplus of $3 billion in FY19 to a trade deficit of $15 billion in FY25.

This deal aligns with Europe’s broader strategy to lessen its reliance on China and diversify its global supply chains.

The anticipated benefits from the agreement are likely to arise from a gradual transformation in the nature of India’s exports to the EU.

Higher-value items such as electronics, machinery, and chemicals are expected to command a larger market share, moving beyond traditional labor-intensive products.

This shift is particularly crucial as the EU’s share in India’s exports has decreased to 16.8 percent so far in FY26.

Emkay Global has noted that Europe’s diminished dependence on Russian energy and its initiative to source more products outside of China have already increased demand for Indian goods such as refined fuels, electronics, and chemicals.

A free trade agreement would further amplify these trends by making trade cheaper and more reliable.

In FY25, total goods trade between India and the European Union surpassed $136 billion. India’s imports from the EU were valued at $60.7 billion, while its exports to the bloc totaled $75.9 billion.

Trade analysts assert that the trade structure between the two parties is largely complementary rather than competitive.

Ajay Srivastava, founder of the Global Trade Research Initiative, mentioned that Indian exports to the EU, including smartphones, garments, footwear, tires, pharmaceuticals, auto parts, refined fuels, and cut diamonds, mainly replace imports that Europe previously sourced from other nations.

A significant portion of these manufacturing activities was offshored by European companies years ago.

Meanwhile, EU exports to India comprise high-end machinery, aircraft, core electronic components, chemicals, advanced medical devices, and metal scrap.

These inputs bolster Indian factories, recycling units, and MSME clusters, contributing to enhanced productivity and export competitiveness.

The anticipated agreement is expected to reduce or eliminate tariffs on products from India’s labor-intensive sectors while providing European businesses improved access to the Indian market for high-end cars and wines.

Srivastava indicated that due to the differing specialization of India and the EU in various economic segments, tariff reductions would primarily lower costs rather than displace industries.