India and the European Union on Tuesday announced the conclusion of negotiations for the free trade agreement, described as 'mother of all deals'
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EU becomes India's 22nd FTA partner
NEW DELHI — India and the European Union on Tuesday announced the conclusion of negotiations for the free trade agreement, described as 'mother of all deals', under which 93 per cent of Indian shipments will enjoy duty-free access to the 27-nation bloc, while import of luxury cars and wines from the EU will become less expensive.
The deal, concluded after negotiations spanning over two decades, will create a market of about 2 billion people across the world's fourth-largest economy, India, and the second-largest economic bloc, the EU.
Taken together, India and the EU account for 25 per cent of the global GDP and one-third (about USD 11 trillion) of the international trade (about USD 33 trillion).
After holding summit-level talks with the EU's top leaders, Ursula von der Leyen and Antonio Costa, Prime Minister Narendra Modi said India has concluded the biggest free trade agreement in its history with the European Union.
"This is not just a trade agreement. This is a new blueprint for shared prosperity," Modi said.
Commerce and Industry Minister Piyush Goyal said that it is a deal that gives unprecedented market access for over 99 per cent of India's exports by value.
Goyal said that the pact is a strategic breakthrough in the country's global trade engagement, unlocking vast opportunities in the USD 20 trillion EU market for 1.4 billion people.
Once the agreement is implemented, except for auto and steel, almost all the Indian goods (over 93 per cent) from India will get zero-duty access in the European Union, and of the remaining over 6 per cent, Indian exporters will get tariff reduction and quota-based duty concessions (for goods like automobiles).
The pact is expected to be signed later this year and is likely to be implemented in early 2027.
The average tariffs of the EU on Indian goods are already low at around 3.8 per cent and will be reduced to 0.1 per cent under the deal.
But in some sectors, the duties are high. These are marine (0-26 per cent); chemicals (up to 12.8 per cent); plastics and rubber (up to 6.5 per cent); leather and footwear (up to 17 per cent); textiles, apparel and clothing (up to 12 per cent); gems and jewellery (up to 4 per cent); railway, aircraft, ships, boats (up to 7.7 per cent); furniture and light consumer goods (up to 10.5 per cent); toys (up to 4.7 per cent); and sports goods (up to 4.7 per cent).
On all these, the EU will eliminate the duties for India.
On the other hand, the EU will get duty-free access for over 90 per cent of its goods over a ten-year period in India. India will remove duties on only 30 per cent of European goods on the first day of implementation of the pact.
The main EU goods that will get duty concessions include automobiles, wines, spirits, beer, olive oil, kiwis and pears, fruit juices, processed foods like breads, pastries, biscuits, pasta, chocolate, pet food, sheep meat, sausages and other meat preparations.
These goods, at present, attract duties in the range of 33 per cent to 150 per cent. Premium luxury European cars, such as BMW, Mercedes, Lamborghini, Porsche, and Audi, are likely to become less expensive in the Indian market once the bilateral free trade agreement comes into force, as India will offer quota-based import duty concessions under the pact, an official said.
The EU will eliminate duty in a phased manner for Indian automobiles, whereas India will reduce the levies for EU cars to 10 per cent, subject to a quota of 2.5 lakhs per year.
Under the pact, the EU goods such as machinery and electrical equipment, aircraft and spacecraft, optical, medical and surgical equipment, plastics, chemicals, iron and steel, and pharma will enjoy duty-free access in the Indian markets.
"On automobiles, calibrated and carefully crafted quota-based auto liberalisation packages will not only allow EU auto makers to introduce their models in India in higher price bands but also open the possibilities for Make in India and exports from India in future," the commerce ministry said.
India will not give any duty concessions in the dairy (including cheese), soya meal and cereals sectors. The EU is also protecting its sugar, beef, meat and poultry sectors. On the services front, the EU has made one of its best offers to India, opening 144 sub-sectors out of 155, and India is opening 102 sub-sectors to them.
In addition to that, there are commitments around students' mobility, the official said, adding, "We do have some commitments on post-study work visas also from the EU,” a commerce ministry official said.
It said the pact secures expanded and commercially significant commitments from the EU across key sectors of Indian strength, including IT and ITeS, professional services, education, financial services, tourism, and construction.
On mobility, the India-EU FTA provides a facilitative and predictable framework for business mobility covering short-term, temporary and business travel in both directions.
"These enable professionals to travel between the two economies to provide services under different scenarios," it added.
On the contentious issue of Carbon Border Adjustment Mechanism (CBAM) or carbon tax, the pact has not provided any specific concessions to India, but has agreed that any relaxations granted by the 27-nation bloc to other countries under the CBAM provisions will automatically extend to Indian exporters.
"Through CBAM provisions, commitments have been secured, including a forward-looking most-favoured nation assurance extending flexibilities if any granted to third countries under the regulation," the ministry said.
The commitments also include enhanced technical cooperation on recognition of carbon prices, recognition of verifiers, as well as financial assistance and targeted support to reduce greenhouse gas emissions and comply with emerging carbon requirements, it added.
The agreement was announced at a time when India is facing steep 50 per cent tariffs by the US. The EU is also facing a threat of fresh tariffs by the Donald Trump-administration on the Greenland issue.
EU becomes India's 22nd FTA partner.
The NDA government, since 2014, has signed trade deals with Mauritius, the UAE, the UK, EFTA, Oman and Australia, and announced trade deals with New Zealand. In 2025, India signed a trade deal with Oman and the UK and announced the conclusion of a trade deal with New Zealand.