EU-India Seal Historic Trade Deal Worth €4bn in Tariff Savings
The European Union and India have concluded a historic free trade agreement after nearly two decades of intermittent negotiations, with European Commission President Ursula von der Leyen describing it as the "mother of all deals" during her visit to New Delhi on Tuesday.The comprehensive agreement, finalized late Monday night following accelerated talks over the past six months, creates a free trade zone encompassing 2 billion people and is projected to double EU exports to India by 2032. The deal eliminates or reduces tariffs on 96.6% of traded goods by value, generating an estimated €4 billion in duty savings for European companies."Europe and India are making history today," von der Leyen said after meeting Indian Prime Minister Narendra Modi. "We have created a free trade zone of 2 billion people, with both sides set to benefit."Under the agreement, tariffs will be eliminated entirely on a broad range of industrial products, including iron and steel, plastics, chemicals, machinery, and pharmaceuticals. European automotive manufacturers stand to benefit significantly, with India reducing car tariffs to 10% over five years from current rates as high as 110%. Up to 250,000 European-made vehicles will gain preferential access, far exceeding the 37,000 limit in India's separate UK agreement.The deal also addresses European agricultural exports, with India gradually reducing tariffs on wines and spirits to 20-40% from 150%, while eliminating duties on olive oil and processed foods including pasta and chocolate. However, the EU maintains protection for sensitive agricultural sectors, preserving tariffs on beef, chicken, sugar, flour, garlic, and ethanol.Modi characterized the agreement as the "biggest free trade deal in history," emphasizing its potential to create "massive opportunities for 1.4 billion Indians and millions of people in European countries."The timing reflects broader geopolitical realignments as both sides navigate challenges from Donald Trump's tariff policies, China's economic dominance, and ongoing security concerns. India faces 50% US tariffs on exports, while six EU nations have been threatened with higher tariffs over their opposition to Trump's Greenland ambitions.Alongside the trade agreement, the EU and India signed a security pact addressing maritime security, hybrid threats, and counter-terrorism, described by EU officials as advancing "alignment" despite concerns over India's Russia ties. A separate labor mobility agreement will facilitate opportunities for young professionals and seasonal workers.The deal requires ratification by EU member states, the European Parliament, and India's cabinet before implementation. Formal signing is scheduled for later this year, with the agreement potentially taking effect in early 2025.This agreement represents part of the EU's broader strategy to diversify trading partnerships, following recent deals with South America's Mercosur bloc, Indonesia, and Switzerland. For India, the world's most populous nation and fourth-largest economy, it complements existing agreements with the UK and Oman.Source: Based on reporting from The Guardian
