EU and India sign trade agreement

India and the European Union have agreed a trade deal that will cut tariffs on EU exporters by €4 billion and potentially double the bloc’s exports to India.

The deal, described in Brussels as the largest ever by the two sides, will cut or reduce tariffs on 96.6% of EU exports to India, cutting the cost of European goods including cars, alcohol and machinery, the Financial Times reported. Sensitive agricultural sectors for both sides, including dairy, sugar and some meat, were left out of the deal.

The two sides finalised the deal on Tuesday during a visit to India by European Commission President Ursula von der Leyen and European Council President António Costa.

The deal comes as both Brussels and New Delhi face a wave of tariffs from US President Donald Trump, who has imposed duties of up to 50% on some Indian goods over India’s purchases of Russian crude oil. Last week, he also threatened EU countries with additional tariffs of 10% if they resist his plans to take control of Greenland.

According to the EU statement, New Delhi will grant Brussels tariff concessions “that no other trading partner has received.” Tariffs on European cars will be gradually reduced from 110% to 10%, with a quota of 250,000 cars per year.

Tariffs of up to 44% on cars, 22% on chemicals and 11% on pharmaceuticals will be largely eliminated. Tariffs of up to 22% on steel and iron will also be phased out over 10 years.

Tariffs of more than 36% on European food products, which the EU has called “prohibitive”, will also be reduced or eliminated, the bloc said.

Indian tariffs on European wine will be reduced from 150% to 75%, and later to levels as low as 20%, while duties on olive oil will be reduced from 45% to zero over five years. Tariffs of up to 50% on processed agricultural products, including bread and confectionery, will also be eliminated.

The deal must be approved by the European Council and Parliament, as well as the Indian government, before it can enter into force. According to Brussels, the EU and India trade more than €180 billion in goods and services each year.

India has recently signed a number of trade deals, including with the UK, New Zealand and Oman. Economists estimate that the Modi government has already concluded or is negotiating deals with countries that account for about 55% of India’s total trade.

At the same time, European industry groups remain sceptical about how far India will open its market.

Tags: EU, India