India-EU Trade Deal: Beyond Goods to FDI, Services & Strategic Ties

The FTA is described as the "mother of all deals" - which is balanced, yet ambitious and mutually beneficial for both parties. In FY25, India-EU goods trade was almost $140 billion.

Details show that the India-EU trade is built on complementary value chains. The EU sells capital goods and industrial inputs to India (such as high-end machinery, electronic components, aircraft, and medical devices).

"India sells labour-intensive and consumer-focused goods to the EU (such as smartphones, garments, footwear, pharmaceuticals, auto parts, and diamonds, though fuel tops the list), said the report.

The trade agreement aims to liberalise 92-97 per cent of tariff lines. Officials hope the deal will double bilateral trade within five years.

Several sectors are to be liberalised, while respecting red lines on both sides.

Labour-intensive exports like textiles, leather, marine products, gems and jewellery are set to gain from preferential access and tariff elimination, said thew report.

India is expected to cut import duties on automobiles from 110 per cent to as low as 10 per cent (quota of 250,000) and Indian-made automobiles will get access to the EU market.

"Tariffs on the EU's export of wine to be cut from 150 per cent to 75 per cent (and eventually reduced to 20 per cent). Both sides to get preferential access to each other's agricultural markets, while safeguarding sensitive sectors (e.g. dairy for India and chicken/beef for the EU)," the report mentioned.

Services trade is likely to benefit from preferential access (e.g. in financial services). Labour may benefit from easier mobility norms. Investment may get a boost from supply chain integration and deeper partnerships (for instance, in defence), it added.

The potential for growth is substantial, given the trade in this region is only 0.6 per cent of global trade.

- IANS