India-EU FTA Concluded: Auto Sector Opens, Trade Set to Soar

Describing the agreement as balanced and forward-looking, Agrawal noted that it would strengthen economic integration between India and the EU and significantly boost trade and investment flows.

The FTA is expected to come into force sometime next year after the legal review of the text, a process that could take around five to six months, following which the formal signing will take place.

Often referred to as the 'Mother of All Deals,' the India-EU FTA is being seen as a major step in expanding India's global trade footprint.

He believe the agreement could help soften the impact of high US tariffs by opening up wider opportunities in the European market, especially for Indian exports such as textiles and jewellery.

One of the most significant outcomes of the pact is the opening up of India's automobile sector to European car manufacturers.

Import duties on European vehicles are expected to be sharply reduced from the current 110 per cent to around 40 per cent -- making cars from companies like Volkswagen, Mercedes-Benz and BMW more affordable in the Indian market.

The auto sector has traditionally been one of the most protected areas of the Indian economy and is largely dominated by Japan's Suzuki Motor and Indian brands Mahindra and Tata, which together control nearly two-thirds of the market.

At present, European companies hold only about 4 per cent of India's annual car market of 4.4 million units.

The EU already plays a key role in India's trade landscape. It accounts for around 17 per cent of India's total exports, while exports to India make up about 9 per cent of the EU's overseas shipments.

In the financial year 2024-25, India's bilateral trade in goods with the EU stood at $136.53 billion, with exports worth $75.85 billion and imports at $60.68 billion.

This made the EU India's largest trading partner in goods. Trade in services between the two sides reached $83.10 billion in 2024.

- IANS