'The mother of all deals': EU and India strike landmark agreement amid U.S. tariffs

Leaders of the European Union and India announced a wide-ranging trade agreement on Tuesday, which came after nearly two decades of on-and-off negotiations that became increasingly urgent in the last six months after stiff tariffs were imposed by U.S. President Donald Trump. 

Both Indian Prime Minister Narendra Modi and Ursula von der Leyen, president of the European Commission, called it "the mother of all deals." 

Modi also emphasized the trade agreement is the largest and most comprehensive that India has ever signed, representing a third of all global trade. 

The free trade deal cuts tariffs on nearly 97 per cent of European goods by value imported to India, and it's expected to double EU exports to the South Asian country by 2032. 

"We are creating a market of two billion people," said von der Leyen as the deal was announced. 

"This is the tale of two giants, the world's second and fourth largest economies. Two giants who choose partnership in a true win-win fashion."

The announcement of the landmark deal came on the heels of India's annual ceremonial military parade to mark Republic Day, where von der Leyen and European Council President António Costa were feted as honoured guests. It's an event that Indian leaders often use to hint at their strategic priorities. 

The deal will chip away at India's historically high trade barriers and open up its tightly-guarded domestic market for many goods, including European cars. 

Tariffs on cars imported from Europe from auto companies such as Volkswagen, Renault and Mercedes-Benz, will be slashed to 10 per cent from what now runs as high as 110 per cent on some vehicles. 

India also agreed to reduce duties on European wine, chocolates, olive oil and other products. 

For its part, New Delhi will benefit from eliminated tariffs on textiles, leather, gems and jewelry, and other goods entering the EU, and the agreement promises easier access for Indian highly skilled professionals to work in Europe — a major win for the country's labour force. 

Von der Leyen said the deal was "a strong message that co-operation is the best answer to global challenges," and it would "reduce strategic dependencies at a time when trade is increasingly weaponized."

The global challenge that many countries are grappling with is the Trump administration's erratic trade policy, which simply accelerated the talks between EU leaders and New Delhi. 

"This momentum that we've seen is all thanks to President Trump," said Praveen Donthi, senior analyst for India with the think-tank International Crisis Group.