Written by On January 27, the European Union (EU) and India finalized a landmark free trade agreement after approximately 18 years of negotiations. This pact aims to significantly reduce tariff barriers and expand the exchange of goods and services between the two regions.
Leaders from both sides have hailed the deal as a “milestone,” as it connects two of the world’s largest economies—the fourth (EU) and second (India)—creating a combined trade zone of nearly 2 billion people.
Tariff Reduction and Commercial Impact
The core of the agreement lies in a sweeping reduction of tariffs on the majority of products traded between the two economies. According to the European Commission:
- India will eliminate or reduce import duties on approximately 96.6% of goods exported from the EU.
- The EU will liberalize 99.5% of its tariff lines for Indian imports over a gradual period of up to seven years.
This reduction in barriers represents an estimated annual saving of up to €4 billion in customs duties for European exporters—capital that could directly improve production costs and the competitiveness of products in both markets.
Among the most impacted industrial sectors are machinery, chemical components, aircraft, and pharmaceuticals, all of which will see tariffs disappear or decrease progressively. Additionally, the automotive sector will see significant tax reductions on specific vehicles in the coming years.
Excluded Sectors and Next Steps
Despite the broad scope of the agreement, certain sensitive sectors—particularly within agriculture—have been excluded from total liberalization. Products such as beef, poultry, and sugar will remain under specific tariff regimes to protect local producers.
The agreement must still undergo several formal stages before entering into force:
- Legal review of the final texts.
- Translation into the official languages of the EU.
- Approval by the European Parliament and Member States.
- Internal ratification by India.
Once these steps are completed, the tariff reductions and regulatory provisions will be applied gradually, with the goal of boosting bilateral trade volume and strengthening supply chains between the EU and India.