India and the European Union have finalised long-pending Free Trade Agreement that covers economies that represent roughly 25% of global GDP and one-third of global trade. The deal will strengthen economic and political ties between the world’s two largest democracies as they seek to hedge against fickle ties with the US.
“Europe and India are making history today,” European Commission President Ursula von der Leyen said in a post on social media. “This is only the beginning.”
The landmark deal will see EU cut tariffs on 99.5% goods traded over seven years, with tariffs to be cut to zero on Indian marine goods, leather and textile products, chemicals, rubber, base metals and gems and jewellery. The deal is expected to double EU exports to India by 2032 by reducing tariffs in 96.6% of traded goods by value, helping the European companies save upto 4 billion euros ($4.75 billion) in duties, the EU said.
FTA unlocks vast opportunities in EU’s USD 20 trillion market
Commerce and Industry Minister Piyush Goyal, who was among the chief negotiators, said that India will get an “unprecedented” market access at concessional duties for over 99 per cent of its exports by value in the European Union (EU) market, unlocking vast opportunities in the USD 20 trillion EU market for 1.4 billion people.
The pact is also expected to create huge trade and investment opportunities for Indian businesses and benefit MSMEs, women, youth, artisans, workers, students, skilled professionals, fisherfolk, farmers, and exporters.
The India-EU Free Trade Agreement has opened up new pathways for growth, investment and strategic cooperation, Prime Minister Narendra Modi said, adding that the pact will drive trade, investment and innovation while strengthening strategic relationship between India and Europe.
“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,” PM Modi said.
Bilateral merchandise trade between India and the EU was valued approximately at INR 11.5 Lakh Crore (USD 136.54 billion) in 2024-25, with India exporting roughly INR 6.4 Lakh Crore (USD 75.85 billion) to the EU. India-EU trade in services reached INR 7.2 Lakh Crore (USD 83.10 billion) in 2024.
Mercedes-Benz, BMW to get cheaper; tariffs on wines to be slashed by 75%
European automakers such as Volkswagen, Renault, Mercedes-Benz and BMW are expected to get cheaper, with New Delhi set to slash tariffs on European cars to 10% over five years from as high as 110%.
India has also agreed to slash tariffs on alcoholic beverages like wines to 75% immediately from 150%, which would be lowered to 20% gradually. Tariffs on spirits will be lowered to 40%, the EU said.
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 was quoted as saying by news agency Reuters.
Flurry of trade deals
The India-EU FTA agreement comes days after India finalised pacts with Britain, New Zealand and Oman.
The spate of deals were announced after US President Donald Trump put 50% tariff on goods from India.
India-US trade deal collapsed last year after a breakdown in communications between their two governments.
After a nine-year lull, talks between India and the EU were relaunched in 2022, and gathered momentum after Trump put tariffs on several trading partners.