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India and the EU have concluded «the main trade deal of all time». At least, that is how Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen called it. The agreement will also affect Russia, according to economists interviewed by Kommersant FM. The leaders of India and the EU announced the achievement of the agreement today. At the same time, negotiations on the document lasted more than 20 years. According to the reached agreements, India will abolish duties on almost 97% of European exports. Including chocolate, pasta and olive oil. Tariffs for wines, cars and precious metals will also be gradually reduced. Brussels calculated that against this background they will be able to save up to $4.75 billion per year.
The EU, in turn, will allocate €500 million to support India’s environmental projects, and will also open access to its labor market. One of the factors in achieving the deal could be the EU’s conflict with Donald Trump, says Oleg Abelev, Head of the Analytical Department at Rikom-Trust IC: «For the EU, diversification of supply chains from China and the search for a growing market with demographic potential are important. And for India, it is important to attract investment and technology, gain access for specialists from India, and also increase exports to the largest economic bloc. This is not so much about a split with Washington as about different strategic approaches to global challenges. This forces the EU to more actively seek its own supports in world politics and economics, without relying on the transatlantic link. And the agreement with India is only part of the strategy.
In the short and medium term, this agreement will not replace trade with Washington, because the scales are incomparable. Trade and investment between the EU and the US are the foundation of the world economy, the largest bilateral relationship in the world. In addition, there are structural differences. India is primarily a sales market and a production alternative, while the US for the EU is both a market and a source of goods and capital. The EU may transfer part of production: textiles, pharmaceuticals, auto parts, green technologies from China and other Asian countries to India, but this will not be a replacement for the American direction, but an addition to it.
India will face green and digital standards, which will increase the cost and complexity of interaction. Plus, India’s main financial and logistics flows will be tied to the West and Southeast Asia, which may complicate trade with Russia. It must be understood that the partners have different attractiveness. The EU offers technology, investment, access to a market of 450 million consumers with relatively high incomes, while Russia offers cheap energy, weapons and a geopolitical balance in the UN. That is, for India this is not an «either-or» choice, but parallel relations.»
The European automotive industry received from India the most favorable import duty among all trading partners of New Delhi, Bloomberg writes. The tariff on imported cars will be reduced from 110% to 10%. Ursula von der Leyen noted that the EU has created a free trade zone with a market of 2 billion people. According to her, both sides will benefit from this deal. The rupee became the weakest Asian currency in 2025. According to media reports, Russia has accumulated a large amount of Indian currency, the withdrawal and use of which is limited. Against this background, the regulator of India even suggested that companies invest funds in government bonds.
However, now Moscow may have another use for its rupee reserves, notes Andrey Kolganov, Head of the Laboratory of Comparative Studies at the Faculty of Economics of Moscow State University: «In principle, an additional inflow of European goods into India gives Russia the opportunity to receive European goods through Indian intermediaries. Just as we did through Turkey, Central Asian countries and so on. India was not in the first ranks of the countries through which we carried out the so-called gray import. But our trade volumes with India are quite significant. Maybe some companies will indeed want to participate in the practice of intermediary trade, helping us bypass sanctions and, naturally, earning on this.
For now, I will not venture to predict what scale such operations can reach, to what extent this will allow us to effectively realize the accumulated Indian rupees that were paid for Russian oil. A new, stronger partner will now appear in New Delhi, which will strictly insist on compliance with sanctions. It is difficult to assume what the dynamics of economic relations with Russia will be; it depends on how Indian companies and the government behave. For example, in China, some banks and companies that are closely integrated into the world market prefer to one degree or another to support the sanctions regime. And smaller companies prefer to take risks and engage in trade operations with Russian partners.»
In August, Washington imposed additional 25 percent duties on goods from India for continuing to import oil from Russia. Additional sanctions are also expected to be introduced by the EU. However, Stanislav Mitrakhovich, a senior researcher at the Financial University and an energy expert, doubts that the Europeans will continue to strictly monitor supplies of Russian raw materials against the backdrop of tense relations with the US: «Now Russia supplies oil to India, where it is processed into petroleum products, which go to various markets, including both the domestic Indian market (1.5 billion people) and for export, including to Europe.
But the 18th sanctions package provides for a delayed measure that came into force on January 21, 2026. A ban on the import of petroleum products from third countries if they are made in Russia, that is, India and Turkey fall under this definition. But the EU is now in a situation where there is confrontation with America, the conflict with Russia has not even come close to ending, and now it also needs to punish India and Turkey for having the audacity to buy Russian oil. Perhaps after signing this document, they will not harass the Indians. But there are no prospects for growth in oil supplies here, since, according to the 18th sanctions package, they must slow down these supplies, at least until a new legal framework is created.
The official signing of the agreement between India and the EU will take place after legal review. According to Reuters sources, it may take from five to six months.
Ulyana Gorelova
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