India-EU Trade Deal: Tariff Cuts Announced on 90% European Goods, Car Import Duty Reduced to 10%

India-EU Trade Deal Finalised: Over 90% EU Goods to Get Tariff Cuts, Car Import Duty to Drop to 10%

India and the European Union have finalised a long-pending and landmark trade agreement, Prime Minister Narendra Modi announced on Tuesday, marking a major milestone in bilateral economic relations.

Under the historic India-EU trade deal, over 90% of European Union goods exported to India will see tariff reductions, a move expected to save EU member states up to €4 billion annually in duties on European products.

EU Exports to India Expected to Double

According to a fact sheet released by the European Union, the trade agreement is projected to double EU exports to India over the coming years. The deal also provides enhanced access to India’s services market, particularly in key areas such as financial services, maritime services, and other professional sectors, helping drive business growth and job creation on both sides.

Market Access to Improve for European Products

As part of the agreement, India will ease market access for a wide range of European goods. Several imports from the EU are expected to attract zero tariffs, significantly reducing costs for Indian consumers and businesses.

Which Products Will Become Cheaper?

Following the implementation of the trade deal, many European imports will see substantial tariff cuts or complete elimination. These include:

Machinery and electrical equipment

1. Aircraft and spacecraft
2. Optical, medical, and surgical instruments
3. Plastics and chemicals
4. Pharmaceuticals
5. Iron and steel products
6. Motor vehicles
7. Pearls, precious stones, and metals (around 22%)
8. Car and Wine Tariffs to Be Reduced Gradually

One of the most notable changes relates to the auto sector. Car import duties will be reduced gradually from a peak of 110% to as low as 10%. Similarly, tariffs on wines will be lowered in phases, falling from 150% to around 20%.

Zero Tariffs on Processed Foods and Edible Oils

Currently taxed at 50%, processed foods such as pasta, bread, biscuits, and chocolate will see tariffs completely eliminated, according to the EU.

Tariffs on olive oil, margarine, and other vegetable oils, currently at 45%, will also be removed. In addition, fruit juices and non-alcoholic beer will attract zero import duty.

‘Mother of All Trade Deals’, Says PM Modi

Calling the agreement the “mother of all trades”, Prime Minister Modi highlighted the scale and impact of the India-EU Free Trade Agreement during meetings with European Commission President Ursula von der Leyen and European Council President Antonio Costa in New Delhi.

“This deal will bring immense opportunities for India’s 1.4 billion people and millions across the European Union,” PM Modi said, noting that the agreement represents around 25% of global GDP and one-third of global trade.

Von der Leyen described the pact as historic, stating that it creates a free trade zone of nearly two billion people, with significant benefits for both economies.

Boost for Indian Sectors and Next Steps

The India-EU trade deal is expected to benefit several Indian sectors, including textiles, gems and jewellery, leather goods, and the broader services industry.

The agreement will now undergo legal vetting, a process expected to take around six months, after which it will require ratification by the European Parliament before coming into force.