India and the European Union reach a free trade deal representing a third of global trade

NEW DELHI (AP) — India and the European Union reached a free trade agreement Tuesday that could affect as many as 2 billion people after nearly two decades of negotiations.

The accord, which the head of the EU's executive branch described as the “mother of all deals," will see free trade on almost all goods between the EU’s 27 members and India, covering everything from textiles to medicines, and bringing down high import taxes for European wine and cars. It will likely take several months before the agreement takes effect.

The deal between two of the world's biggest markets comes as Washington targets both the Asian powerhouse and the EU bloc with steep import tariffs, disrupting established trade flows and pushing major economies to seek alternate partnerships.

“This agreement will bring major opportunities for the people of India and Europe,” Indian Prime Minister Narendra Modi said in a virtual address to an energy conference. “It represents 25% of the global GDP and one-third of global trade.”

India and the EU also agreed on a framework for deeper defense and security cooperation, and a separate pact aimed at easing mobility for skilled workers and students, signaling that their partnership extends beyond commerce.

The negotiations for the India-EU deal got a new impetus after U.S. President Donald Trump’s strong-arm trade tactics, including threatening his European allies with punitive tariffs over their objections to Trump's threats to take control of Greenland.

Modi, speaking at a joint news conference in New Delhi with European Commission President Ursula von der Leyen and European Council President António Costa, said that the partnership with the EU “will strengthen stability in the international system” at a time of ”turmoil in the global order.”

“Europe and India are making history today. We have concluded the mother of all deals,” von der Leyen posted on X.

In a speech later, she said that the accord was a tale of “two giants” who chose partnership "in a true win-win fashion.” She also said that it sends "a strong message that cooperation is the best answer to global challenges.”

The deal is expected to further integrate supply chains and strengthen joint manufacturing power between the two economies. It will also cut up to 4 billion euros ($4.7 billion) in annual tariffs for exporters and create jobs for millions of workers in India and Europe.

A formal signing of the deal could come later this year after officials go through the legal details of the text and the European Parliament ratifies it. India's trade minister, Piyush Goyal, said that he expected the deal to take effect by the end of the year.

India is expected to reduce or eliminate tariffs for 96.6% of EU exports, while Brussels will reciprocate with similar reductions in phases that eventually cover nearly 99% of India’s shipments by trade value, according to statements from both sides.

India's sectors poised to gain from the deal include textiles, apparel, engineering goods, and leather, handicraft, footwear and marine products, while the EU’s gains will be in wine, automobiles, chemicals and pharmaceuticals, among others.

A quota system for automobiles, wines and whisky has been agreed upon, bringing down steep duties.

The European Commission said that tariffs charged by India on EU-made cars will gradually go down from 110% to as low as 10%, while they will be fully abolished for car parts after five to 10 years. Tariffs ranging up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will also be mostly eliminated.

On European wine, the tariffs in India would come down from 150% to 20% for premium wines.

New Delhi has excluded dairy products such as milk and cheese from the deal, along with cereals, citing “domestic sensitivities” about those products. For its part, the EU won’t allow concessional tariffs on imports of Indian sugar, meat, poultry and beef products, Indian Trade Ministry officials said.

India is looking to diversify its export destinations as part of a strategy to offset the impact of higher U.S. tariffs, including an extra 25% levy on Indian goods for its unabated purchases of discounted Russian oil, bringing the combined tariffs imposed by the United States on its Asian ally to 50%.

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.

“This is the most comprehensive trade deal India has ever signed, which gives European companies a first mover advantage into this market and gives them a strategic upper hand that other players do not,” said Garima Mohan, a senior fellow at the German Marshall Fund.

Trade between India and EU stood at $136.5 billion in 2024 to 2025. The two sides hope to increase that to about $200 billion by 2030, Indian officials said.

“Ultimately, the agreement is about creating a stable commercial corridor between two major markets at a time the global trading system is fragmenting,” Indian trade analyst Ajay Srivastava said.

The EU is still reeling from the aggressive approach of its once-stalwart ally across the Atlantic. There’s a widespread sense of betrayal across the bloc from Trump’s onslaught of higher tariffs, embrace of far-right parties and belligerence over Greenland, a semiautonomous territory of EU member Denmark.

Brussels has accelerated its outreach to markets around the world. Over the past year, von der Leyen has signed deals with Japan, Indonesia, Mexico and South America under the catchphrase “strategic autonomy,” which in practice is akin to decoupling from a U.S. seen by most European leaders as erratic.

Sam McNeil reported from Brussels.

CORRECTS ID OF MAN SECOND FROM LEFT - Bjoern Seibert, Chief of cabinet to European Commission President Ursula von der Leyen, second from left, talks with Indian National Security Advisor, Ajit Doval, center, and Indian Minister for Commerce and Industry Piyush Goyal, left, in New Delhi, India, Tuesday, Jan. 27, 2026, before an announcement by Indian Prime Minister Narendra Modi, European Council President Antonio Costa and Von der Leyen about reaching free trade agreement between India and EU. (AP Photo/Manish Swarup)

European Commission Commissioner for Trade and Economic Security Maros Sefcovic, second left, talks with Indian National Security Advisor, Ajit Doval, center, and Indian Minister for Commerce and Industry Piyush Goyal, left, before the announcement by Indian Prime Minister Narendra Modi, European Council President Antonio Costa and European Commission President Ursula von der Leyen about reaching free trade agreement between India and EU in New Delhi, India, Tuesday, Jan. 27, 2026. (AP Photo/Manish Swarup)

European Council President Antonio Costa, left, shows his Overseas Citizen of India (OCI) card to Indian Prime Minister Narendra Modi, during his press statement after reaching free trade agreement between India and EU in New Delhi, India, Tuesday, Jan. 27, 2026. (AP Photo/Manish Swarup)

Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Tuesday, Jan. 27, 2026. (AP Photo/Manish Swarup)

European Council President Antonio Costa, left, shows his Overseas Citizen of India (OCI) card to Indian Prime Minister Narendra Modi, during his press statement after reaching free trade agreement between India and EU in New Delhi, India, Tuesday, Jan. 27, 2026. (AP Photo/Manish Swarup)

Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Tuesday, Jan. 27,2026. (AP Photo/Manish Swarup)

European Council President Antonio Costa, center left, and European Commission President Ursula von der Leyen greet officials upon their arrival at the Republic Day parade in New Delhi, India, Monday, Jan. 26, 2026. (AP Photo/Manish Swarup)

Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Tuesday, Jan. 27, 2026. (AP Photo/Manish Swarup)

Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Tuesday, Jan. 27,2026. (AP Photo/Manish Swarup)

Indian Prime Minister Narendra Modi, center, welcomes European Council President Antonio Costa, left and European Commission President Ursula von der Leyen before their meeting in New Delhi, India, Tuesday, Jan. 27,2026. (AP Photo/Manish Swarup)

NEW YORK (AP) — U.S. stocks are hanging near their records Wednesday as oil prices fall and ease the pressure on households and businesses worldwide.

The S&P 500 slipped 0.1% below its all-time high set the day before. The Dow Jones Industrial Average was up 183 points, or 0.4%, as of 12:56 p.m. Eastern time, and the Nasdaq composite was 0.1% lower.

Stocks of companies with big fuel bills helped lead the way on hopes that lower oil prices will remove a big drag on their profits. Norwegian Cruise Line Holdings climbed 5.7%, and United Airlines rallied 7.3%. Delta Air Lines rose 3.7% and is on track to set an all-time high.

The price for a barrel of Brent crude oil fell 4.1% to $95.48 after the ceasefire between the United States and Iran appeared to hold despite the U.S. military launching what it called “self-defense” strikes in southern Iran. A barrel of benchmark U.S. crude fell even more, 4.2%, to $89.69 on hopes that the United States and Iran can reach an agreement to reopen the Strait of Hormuz and allow oil tankers to exit the Persian Gulf for deliveries again.

Stocks have been able to run to records despite the painful inflation and uncertainty caused by high oil prices largely because companies have reported surprisingly strong profits for the start of 2026, and the forecast is for them to continue.

Bath & Body Works rallied 11.2%, and Abercrombie & Fitch climbed 11.8% after both reported bigger profit for the latest quarter than analysts expected. That's even as U.S. consumers continue to say they're feeling discouraged about the economy and inflation.

Lululemon Athletica rose 3.6% after reaching a deal with its founder, Chip Wilson, where it will add a former chief marketing officer of ESPN and a former co-CEO of On to its board of directors.

On the losing side of Wall Street was Dick's Sporting Goods, which dropped 4.9% despite delivering a profit for the latest quarter that edged past expectations. Analysts pointed to how much profit it wrung out of each $1 in revenue, which some called a bit weak.

Oil-and-gas stocks also sank, hurt by the dropping prices for crude. Exxon Mobil fell 1.4%, and Chevron slipped 0.8%. Halliburton dropped 3% to bring its gain for the year so far back toward 40%.

In the bond market, Treasury yields eased after falling oil prices took pressure off inflation. The yield on the 10-year Treasury slipped to 4.48% from 4.50% late Tuesday and from 4.67% roughly a week ago.

It’s a respite following recent gains for yields in bond markets worldwide, which threatened to slow economies and undercut prices for stocks and all kinds of other investments. High yields have already forced the average long-term U.S. mortgage rate to its most expensive level since last summer, and they could curtail companies’ borrowing to build the artificial-intelligence data centers that have supported the U.S. economy’s growth recently.

In stock markets abroad, indexes were mixed across Europe and Asia. South Korea's Kospi was one of the world's best performers and jumped 2.3% after SK Hynix, which is a big beneficiary of the artificial-intelligence boom, soared 9.3%.

A day before, Micron Technology surged to become the latest Big Tech company to be worth more than $1 trillion on AI excitement. Its stock has more than tripled already in 2026, and analysts at UBS said Tuesday it could soar even more because of how fundamentally AI has improved demand for computer memory.

AP Business Writer Elaine Kurtenbach contributed to this report.

Trader Edward Curran, left, and specialist Meric Greenbaum, center, work on the floor of the New York Stock Exchange, Friday, May 22, 2026. (AP Photo/Richard Drew)

A person looks at an electronic stock board showing Japan's Nikkei index at a securities firm Monday, May 25, 2026, in Tokyo. (AP Photo/Eugene Hoshiko)

A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 27, 2026. (AP Photo/Lee Jin-man)

A dealer walks past near the screens showing the foreign exchange rates at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 27, 2026. (AP Photo/Lee Jin-man)

A dealer walks past near the screens showing the Korea Composite Stock Price Index (KOSPI) and the foreign exchange rate between U.S. dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 27, 2026. (AP Photo/Lee Jin-man)

A dealer stands near the screens showing the Korea Composite Stock Price Index (KOSPI), the foreign exchange rate between U.S. dollar and South Korean won and the Korean Securities Dealers Automated Quotations (KOSDAQ) at a dealing room of Hana Bank in Seoul, South Korea, Wednesday, May 27, 2026. (AP Photo/Lee Jin-man)