This agreement is expected to lead to a doubling of European goods exports to India by 2032. Additionally, companies will be able to save up to 4 billion euros annually on customs duties. German automakers such as Volkswagen, Mercedes-Benz, and BMW will particularly benefit from this agreement, as India has agreed to gradually reduce import tariffs on cars from the current 110% to 10%.
There are also plans for significant reductions in alcohol duties: wine tariffs will be cut from 150% to 75% immediately, and then gradually to 20%. Furthermore, tariffs on machinery, electronics, chemicals, as well as iron and steel will also be reduced.
Ursula von der Leyen, President of the European Commission, commented on the event, stating that "Europe and India are making history today." She noted that a free trade area is being created, covering about two billion people.
Indian Prime Minister Narendra Modi characterized this agreement as "the mother of all deals," emphasizing that it opens new horizons for 1.4 billion residents of India and millions of Europeans.
According to Volker Treier, Director of Foreign Trade at the German Chamber of Commerce and Industry, the agreement will be a "real game changer" for companies looking to enter the Indian market.
Before the agreement comes into force, its texts must undergo legal review, which may take five to six months, Reuters reports. The launch of the agreement is expected within the next year, with trade between the EU and India for the fiscal year ending in March 2025 projected to reach $136.5 billion.
This agreement has become possible against the backdrop of global changes in trade. The EU and India are seeking to diversify their economic ties, especially after U.S. President Donald Trump increased pressure on his trading partners, including threats of new tariffs. Previously, negotiations between India and the U.S. on a trade agreement faced difficulties.
The negotiation process between the EU and India was resumed in 2022 after a nine-year hiatus and intensified following the U.S. imposition of 50% tariffs on certain Indian goods.
According to trade expert Ajay Srivastava, the agreement with the EU will be an important step for India, helping to offset the impact of U.S. measures, particularly for labor-intensive sectors of the economy.
For the EU, this is already the second significant trade success in a short period: earlier, Brussels completed negotiations with the Latin American bloc Mercosur and signed agreements with Indonesia, Mexico, and Switzerland. At the same time, India has expanded its trade ties with the UK, New Zealand, and Oman.
