After nearly two decades of on-off negotiations, the deal will pave the way for India to open up its vast and guarded market, the world's largest, to free trade with the 27-nation EU, its biggest trading partner.
"Yesterday, a big agreement was signed between the European Union and India," Modi said.
"People around the world are calling this the mother of all deals. This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe," he said.
He added the agreement represents 25 per cent of global GDP and one-third of global trade.
Modi and European Commission President Ursula von der Leyen are expected to make a joint announcement at an India–EU summit in New Delhi, along with the details of the deal, later on Tuesday.
Trade between India and the EU stood at $US136.5 billion ($A197.4 billion) in the fiscal year through March 2025.
The agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.
During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.
The spate of deals underscores global efforts to hedge against the United States as President Donald Trump's bid to take over Greenland and tariff threats on European nations test longstanding alliances among Western nations.
Trump has imposed a 50 per cent tariff on goods from India and an India-US trade deal collapsed last year after a breakdown in communication between the two governments.
The formal signing of the India-EU deal would take place after legal vetting expected to last five to six months, an Indian government official aware of the matter has said.
"We expect the deal to be implemented within a year," the official added.
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