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India & EU Forge Historic Trade Deal, Slashing Car Tariffs to 40%

India and the European Union have concluded negotiations on a major free trade agreement, with a formal announcement expected at the upcoming summit. The deal is described as balanced and aims to significantly strengthen economic integration and boost trade flows between the two partners. A key provision is the drastic reduction of import duties on European cars, making vehicles from manufacturers like Volkswagen and BMW more affordable in India. The agreement builds on the EU's position as India's largest trading partner in goods, with bilateral trade exceeding $136 billion.

Key Points: India-EU Sign Historic FTA, Major Auto Tariff Cuts Announced

  • Concluded FTA negotiations
  • Auto import duties cut from 110% to 40%
  • Deal to boost textiles & jewellery exports
  • EU is India's largest goods trading partner
2 min read

India, EU set to announce 'mother of all trade deals'

India and the EU conclude a landmark free trade agreement, set to slash car import duties from 110% to 40% and significantly boost bilateral trade.

India, EU set to announce 'mother of all trade deals'
"balanced and forward-looking - Commerce Secretary Rajesh Agrawal"

New Delhi, Jan 27

Prime Minister Narendra Modi is set to host the 16th European Union-India Summit in the national capital on Tuesday with President of the European Commission, Ursula von der Leyen, and visiting President of the European Council, Antonio Costa, to announce the 'mother of all trade deals'.

According to Commerce Secretary Rajesh Agrawal, India and the EU have concluded negotiations on the much-awaited Free Trade Agreement (FTA) and the announcement of the conclusion of talks will be made at the 16th India-EU Summit.

The Summit will offer an opportunity to build on the EU-India strategic partnership and further strengthen collaboration across key policy areas such as trade, security and defence, the clean transition and people-to-people cooperation.

According to officials, the signing of the deal will take place in about six months after the legal scrubbing. The deal is expected to come into effect sometime next year.

The summit is taking place against the backdrop of the positive momentum in EU-India relations in recent years.

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

The India-EU FTA is being seen as a major step in expanding India's global trade footprint. 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.

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

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Reader Comments

A
Arjun K
While cheaper European cars sound exciting, I'm worried about our domestic auto industry. Maruti, Tata, Mahindra have worked so hard. Will they be able to compete if duties on imports drop from 110% to 40%? We need safeguards.
R
Rohit P
"Mother of all trade deals" is a bold claim! Hope it lives up to the hype. The EU is already our biggest goods trading partner. Taking it to the next level with services and investment is the key. Good strategic move to diversify from over-reliance on any single market.
S
Sarah B
As someone working in the tech sector, I'm keen to see the details on services and digital trade. Easier movement of skilled professionals is crucial. Also, hope the deal has strong provisions for data protection that work for both sides.
V
Vikram M
Finally! Negotiations have been going on for over a decade. This shows real political will from both sides. A balanced deal is good, but we must ensure our farmers and dairy sector are protected. We can't have a repeat of past concerns.
K
Karthik V
The timing is interesting, with global trade tensions rising. Aligning closer with the EU makes strategic sense. But let's read the fine print after the legal scrubbing. The devil is always in the details with these mega-deals.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

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