After nearly 20 years of negotiations, India and the European Union say they have reached the "mother of all deals" on trade.
The new agreement could affect nearly 2 billion people and one-third of global trade.
It comes as Donald Trump's administration pursues an aggressive tariff strategy against both New Delhi and Brussels.
Here is what both India and the EU are set to get from the deal, what it means for global trade and what it might indicate about future agreements.
What does the EU get from the deal?
The agreement is expected to see EU exports to India double by 2032.
EU exporters will see Indian tariffs currently levied on 30 per cent of goods immediately removed.
Tariffs will also be eliminated or reduced altogether for more than 96 per cent of traded goods by value, saving European companies some 4 billion euros ($6.87 billion) a year, the EU said.
"This agreement will bring major opportunities for the people of India and Europe," India's Prime Minister Narendra Modi said in a virtual address to an energy conference.
"It represents 25 per cent of the global GDP and one-third of global trade."
India will drop duties on imported European cars from 110 per cent to 10 per cent over five years.
It will enact a 250,000-car quota that will likely benefit European manufacturers like Volkswagen, Mercedes-Benz and Renault.
India is also immediately slashing tariffs on alcoholic beverages like wines from 150 per cent to 75 per cent, then gradually to 20 per cent.
Tariffs on spirits will be lowered to 40 per cent, the EU said.
New Delhi will also remove all tariffs on machinery, electrical equipment, chemicals and pharmaceuticals.
What does India get from the deal?
Indian marine, leather, textile, chemical, rubber, base metals, gems and jewellery will face no import taxes in the EU.
EU tariffs on 99.5 per cent of Indian goods will be cut over seven years, with 93 per cent of goods facing no duty within the same time frame.
India will be allowed to continue levying some tariffs on European cars and agricultural products.
New Delhi has excluded dairy products such as milk and cheese from the deal, along with cereals, citing "domestic sensitivities" about those products.
The EU will also not allow concessional tariffs on imports of Indian sugar, meat, poultry and beef products, officials at Indian Trade Ministry said.
India and the EU have also agreed on a framework agreement for deeper defence and security cooperation.
They also signed a separate pact aimed at easing mobility for skilled workers and students, a move that could create a significant number of jobs in both economies.
Why has the deal been signed now?
Speaking at a joint news conference in New Delhi with European Commission president Ursula von der Leyen and European Council president António Costa, Narendra Modi said the partnership with the EU "will strengthen stability in the international system" at a time of "turmoil in the global order".
Washington is targeting both India and the EU with steep tariffs, disrupting established trade flows and pushing major economies to seek alternate partnerships.
India signed a new trade deal with the UK last year and has recently inked new deals with New Zealand and Oman.
The negotiations for the India–EU deal gained pace after US President Donald Trump's strong-arm tactics over tariffs and Greenland.
"Europe and India are making history today. We have concluded the mother of all deals," Ms von der Leyen said in a post on X.
In a speech later, she said the accord was a tale of "two giants" — the world's second- and fourth-largest economies — "who chose partnership, in a true win-win fashion".
She also said it sent "a strong message that cooperation is the best answer to global challenges."
India has faced an additional 25 per cent tariff from the US for its purchase of Russian oil, which Washington said was helping fund that country's war in Ukraine.
It has looked to diversify its export markets as its goods face a 50 per cent tariff to get into the US market.
For the EU, the deal offers the bloc expanded access to one of the world's fastest-growing major economies, and helps European exporters and investors reduce their reliance on more volatile markets.
Trade between India and the EU stood at $US136.5 billion ($196 billion) in the fiscal year to March 2025, compared to $US132 billion ($189 billion) of trade between India and the US, and $US128 ($184 billion) between India and China.
Is it the 'mother of all deals'?
APAC Advisors chief executive Steve Okun told the ABC's The World that Donald Trump had been trying to get better American access to both markets, but now US goods faced increased competition in India and the EU.
"What Donald Trump has been trying to do is achieve greater market access in India and he succeeded — he just did it for the EU, not for Americans and not for American businesses," Mr Okun said.
The EU is still grappling with higher US tariffs and Mr Trump's position on Greenland, while Indian goods face a 50 per cent tariff in the US.
"You had Donald Trump pushing away the Europeans, you had Donald Trump pushing away the government of India.
"This is the kind of bullying you expect from the United States now, unfortunately, and it's what's leading these other countries to find different people to trade with."
The EU has struck deals with Japan, Indonesia, Mexico and South America under the catchphrase "strategic autonomy" in the past year — a move many see as reducing reliance on the US.
"If the US continues to do this kind of weaponisation of trade, you're going to see, I think, an acceleration of more of these deals," he said.
He added the deal between India and the EU could signal the start of a new direction in global trade.
"It could be the mother of future deals … countries are starting to come together because they don't want to rely on China and now they don't want to rely and cannot rely on the US," he said.
"The question is what is going to be the new rules-based system in place, because the one that had been built up over eight decades doesn't exist anymore and so we're seeing this rewriting."
A formal signing of the EU–India deal could come later this year, with the deal taking effect once it is signed off by the EU Parliament.
ABC/wires
