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The European Union and India have reached a major trade agreement that will create one of the world’s largest free trade zones, impacting more than 2 billion people.
Getting into it: The agreement, reached following a meeting between European Commission President Ursula von der Leyen, Indian Prime Minister Narendra Modi, and European Council President António Costa, is the result of nearly two decades of negotiations. It eliminates or reduces tariffs on 96.6% of EU exports to India and 99.5% of Indian exports to the EU over a phased timeline, establishing a free trade framework. Covering goods, services, and investment, the pact is expected to double EU exports to India by 2032 and save European exporters roughly $5 billion annually in duties.
Von der Leyen called it “the mother of all deals,” adding, “We have created a free trade zone of two billion people, with both sides set to benefit.” Modi echoed the sentiment, stating, “This agreement will bring major opportunities for the 1.4 billion people of India and the millions of people in Europe.”
India stands to benefit significantly in sectors such as textiles, gems, footwear, and marine products. Meanwhile, the EU will gain unprecedented access to India’s protected market, with tariffs slashed from 110% to as low as 10% on automobiles over five years, and wine tariffs falling from 150% to 20% for premium products.
European exporters of machinery, chemicals, pharmaceuticals, and aerospace products will see near-total duty elimination. EU companies are also expected to enjoy a “first mover advantage” in India, with von der Leyen noting, “This is the most comprehensive trade deal India has ever signed.”
Despite its scope, the deal includes key exemptions. India excluded dairy, cereals, and meat products from tariff concessions due to domestic sensitivities, while the EU withheld similar concessions on Indian sugar, meat, poultry, and beef.
