“This agreement creates new opportunities for growth and good jobs – in Europe and India alike – while deepening the strategic partnership with the world’s largest democracy,” said Lars Klingbeil, Germany’s finance minister and also vice chancellor of Europe’s biggest economy.

The deal, announced in New Delhi during a visit by EU chiefs, “opens a new chapter in European trade policy,” Klingbeil said.

“At a time of upheaval, we are consciously focusing on openness, reliability, and strong partnerships.”

As trade with the US and China has become increasingly difficult in the wake of President Donald Trump’s tariff blitz, Europe has been seeking to strike trade deals and open up new markets for its exporters.

This is particularly important for Germany, whose export-driven economy is mired in a long decline due to a host of challenges.

The country’s crucial auto industry, which is set to benefit from reductions in auto tariffs, cheered the deal.

“India is a key partner for the German automotive industry, an important production location, and an important market for the future,” Hildegard Mueller, president of the VDA car industry group, said in a statement to AFP.

The agreement is a “strong signal of the ability to act,” she added.

The VDMA mechanical engineering association noted that India was “one of the fastest-growing and most strategically important markets for our industry”.

“With this agreement, Europe is sending a clear signal in favour of rules-based trade and against the law of the jungle,” said the group’s chief executive Thilo Brodtmann.