The Free Trade Agreement was signed today between India and the European Union after an 18-year wait. The deal is expected to bring good news to many, especially wine and whiskey connoisseurs and car enthusiasts. Celled the “mother of all trade deals” by European Commission President Ursula von der Leyen, the pact will open European markets to Indian goods while making European imports cheaper in India through lower duties.
On January 27, India and the EU declared the completion of FTA talks and announced the signing of the deal. It will allow more than 93% of Indian products to enter the EU without duties, alongside tariff reductions and quota-based allowances for the remaining items. Indian industries such as apparel, chemicals, and footwear are set to benefit, while the EU will receive duty-free entry for 93% of its products in India over a decade, beginning with 30% on the first day.
European cars such as Mercedes, BMW and Audi currently attract an import duty of over 100 per cent. According to the agreement, cars costing more than 15,000 euros -- around Rs 16 lakh -- will now attract a duty of 40 per cent. This duty will be further reduced to 10 per cent, slashing prices of these cars by lakhs. The two sides have agreed on "quota" based duty concessions, an official from the Commerce Ministry told PTI. This has been done to protect the Indian auto industry, which is growing at a fast pace.
Tariffs on precious stones, metal jewellery and pearls will be cut to zero for most items, with reductions for the rest. Existing tariffs on chemicals, iron and pharmaceuticals will also be removed, and the 33% duty on EU sheep meat will be eliminated. The deal also introduces a mobility framework to expand opportunities for Indian professionals and simplify short-term business travel between India and the EU.
European wines from countries like France, Italy and Spain will become much cheaper under the new agreement, as India plans to cut import duty from 150% to 20% over 5–10 years. This will also lower prices of cognac, premium gins and vodkas. However, wines priced below €2.5 will not get duty concessions to protect the domestic market. Indian wines will receive duty benefits in EU countries as well.
This agreement will also lower the cost of imported medicines for cancer and other serious diseases in India. Additionally, it will decrease the prices of medical equipment brought from Europe to India. The deal will also open up 27 European markets for medicines produced in India.
The trade deal will cut tariffs on EU cars in India from 110% to 10%, and reduce wine duties to 20%. Tariffs on processed foods like pasta, oil, juice, and chocolates will be removed. Duties on EU machines, electronics, and aircraft parts will fall to zero, potentially lowering gadget and mobile phone prices in India.