4 months ago
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India and the European Union (EU) connected Tuesday (January 27, 2026) announced the decision of negotiations implicit a escaped commercialized agreement (FTA) that would spot the EU driblet tariffs connected 99.5% of items India exports to the region, with astir tariffs going down to 0% instantly erstwhile the statement comes into effect.
India, connected the different hand, has fixed tariff concessions connected 97.5% of the traded worth betwixt the 2 economies.
Commerce Minister Piyush Goyal and European Commissioner for Trade and Economic Security Maroš Šefčovič connected Tuesday signed the associated announcement connected the decision of the negotiations connected the FTA, successful the beingness of Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, arsenic good arsenic President of the European Council António Costa.
The decision of negotiations connected the FTA marks the extremity of a two-decades-old process, aft talks were archetypal launched successful 2007. Following respective hiccups and pauses to the talks, they were resumed successful 2022 with some sides agreeing to exclude issues connected which statement had been elusive.
According to officials successful the Ministry of Commerce and Industry, the connection successful the papers volition archetypal beryllium cleaned up implicit the adjacent 10-15 days, pursuing which it volition acquisition “legal scrubbing”. It is lone past that it volition beryllium sent to each 27 EU subordinate states aft being translated, earlier it is ratified by the European Parliament.
‘Mother of each deals’
“Today, India has concluded the largest Free Trade Agreement successful its history,” Mr. Modi said successful his statement. “This historical statement volition facilitate entree to the European marketplace for our farmers and tiny industries, make caller opportunities successful manufacturing, and fortify practice successful our services sectors.”
Ms. von der Leyen besides hailed the historical quality of the deal.
“We person delivered the parent of each deals,” she said successful her statement. “We are creating a marketplace of 2 cardinal people. This is simply a communicative of 2 giants — the world’s second- and fourth-largest economies. Two giants who take partnership, successful a existent win-win fashion. A beardown connection that practice is the champion reply to planetary challenges.”
Both sides, however, made definite to exclude their respective delicate sectors. India, for example, made definite to exclude strategical cultivation sectors arsenic good arsenic dairy. The EU volition support its existent tariffs connected its delicate products specified arsenic beef, sugar, rice, chickenhearted meat, beverage powder, honey, bananas, brushed wheat, garlic, and ethanol.
What India gains
According to the Ministry of Commerce and Industry, India has gained tariff reductions crossed 97% of tariff lines, covering 99.5% of commercialized value. Of this, 90.7% of India’s exports volition spot duties eliminated wholly connected time 1 of the woody being implemented. This volition see labour-intensive sectors specified arsenic textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery and definite marine products, amongst others.
Another 2.9% of India’s exports volition spot work elimination implicit 3-5 years, which would see definite marine products, processed nutrient items, and arms and ammunition. Over and supra this, 6% of India’s exports volition spot tariff reductions including definite poultry products, preserved vegetables, bakery products, amongst others.
“Key labour-intensive sectors [such arsenic textiles, apparel, marine, leather, footwear, chemicals, plastics/rubber, sports goods, toys, gems, and jewellery], comprising much than ₹2.87 lakh crore [$33 billion] of exports that are presently subjected to import work betwixt 4% to 26% successful the EU and are important for employment generation, volition participate zero work from introduction into unit of the FTA and frankincense summation enhanced competitiveness successful the EU market,” the Ministry said successful a release.
In particular, of the sectors that India chiefly exports to the EU, the pursuing volition spot duties eliminated entirely: marine products (current duties of up to 26%), chemicals (12.8% currently), integrative and rubber items (6.5%), leather footwear (17%), textiles and apparel (12% each), basal metals (10%), gems and jewellery (4%), furnishings and allied user goods (10.5%), and toys and sports goods (4.7%).
On services, the EU has agreed to commitments crossed 144 services subsectors, including IT/ITeS, nonrecreational services, education, and different concern services.
What India has conceded
Overall, India is offering work elimination and reductions connected 92.1% of the tariff lines, which comprises 97.5% of the EU exports to India. Within this, 49.6% of the tariff lines volition spot an contiguous work elimination erstwhile the statement comes into effect.
Another 39.5% of the tariff lines volition beryllium taxable to a phased elimination of tariffs implicit 5, 7, and 10 years. An further 3% of products volition spot phased tariff reductions.
“Imports of EU’s precocious exertion goods are expected to diversify India’s import sources, thereby reducing input costs for businesses, payment consumers and volition make opportunities for Indian businesses to integrate into planetary proviso chains,” the connection added.
Notably for the EU, the pursuing European sectors volition spot duty-free entree to the Indian markets: machinery and electrical equipment, craft and spacecraft, optical, aesculapian and surgical equipment, plastics, precious stones and metals, chemicals, centrifugal vehicles, robust and steel, pharmaceuticals, and assorted cultivation products.
On services, India has agreed to unfastened up 102 subsectors covering EU priorities specified arsenic professional, business, telecommunications, maritime, financial, and biology services.
Problematic sectors addressed
It has been learnt that negotiations implicit a fewer sectors specified arsenic automobiles and vino had caused immoderate problems, but that the 2 sides yet agreed to quota based systems that were satisfactory to some sides.
India agreed to let European cars supra Rs 25 lakh successful terms to beryllium imported astatine little duties of arsenic debased arsenic 10%, from the existent 110%, but taxable to a quota. These automobiles supra Rs 25 lakh volition beryllium divided into 3 buckets, based connected their terms levels.
For those successful the lowest bucket, wherever Indian manufacturers person a presence, the quota for European companies would beryllium the lowest. The higher the terms level, the higher the quota for the European makers.
On wine, too, India agreed to lowering the work from the existent 150% to 20-30% depending connected the terms of the wine, and taxable to quotas.
