As part of the agreement, it is expected that by 2032, exports of goods from Europe to India will double, allowing companies to save up to 4 billion euros on customs duties. According to forecasts, German car manufacturers such as Volkswagen, Mercedes-Benz, and BMW will benefit the most, as India has agreed to gradually reduce import duties on cars from 110% to 10%.
Customs duties on alcoholic beverages will also be significantly reduced: wine tariffs will decrease from 150% to 75%, with further gradual reductions to 20%. Tariffs on cars, electronics, chemical products, as well as iron and steel are also subject to reduction.
European Commission President Ursula von der Leyen noted that "Europe and India are writing a new history today," emphasizing the creation of a free trade area that covers about two billion people.
Indian Prime Minister Narendra Modi characterized this agreement as "the mother of all deals," highlighting its significance for the 1.4 billion residents of the country and millions of Europeans.
Volker Treier, the foreign trade director of the German Chamber of Commerce and Industry, called the agreement a "real game changer" for companies looking to enter the Indian market.
Before the agreement comes into force, a legal review of the text must be conducted, which may take five to six months. The implementation of the agreement is expected to begin within a year. The trade volume between the EU and India for the financial year ending in March 2025 is projected to be $136.5 billion.
This agreement was reached against the backdrop of global changes in trade. The EU and India are seeking to diversify their economic ties after U.S. President Donald Trump increased pressure on trading partners by threatening new tariffs. Negotiations for a trade agreement between India and the U.S. had previously been unsuccessful.
Negotiations between the EU and India resumed in 2022 after a nine-year hiatus and intensified following the U.S. imposing 50% tariffs on certain Indian goods.
According to trade expert Ajay Srivastava, the agreement with the EU will be an important tool for India, allowing it to mitigate the effects of U.S. measures, especially in labor-intensive sectors.
For the European Union, this is already the second significant success in the trade sphere in a short time: earlier, Brussels completed negotiations with the Latin American bloc Mercosur and signed agreements with Indonesia, Mexico, and Switzerland. India, in turn, is actively expanding its trade ties with the UK, New Zealand, and Oman.
