India-EU trade deal: Exports to double; tariff reductions on 96% goods

The European Union (EU) on Tuesday said its exports to India are likely to double by 2032 under the new free trade agreement between the two sides. The deal will also remove tariffs on 96.6 per cent of EU exports to India, helping European companies save around €4 billion every year in customs duties.

The trade deal, which is being called the 'mother of all deals', will strengthen economic and political ties between the world's second and fourth largest economies at a time of rising geopolitical tensions and global economic challenges.

In an X post, European Commission President Ursula von der Leyen said, “The EU and India make history today, deepening the partnership between the world's biggest democracies. We have created a free trade zone of 2 billion people, with both sides set to gain economically. We have sent a signal to the world that rules-based cooperation still delivers great outcomes. And, best of all, this is only the start - we will build on this success, and grow our relationship to be even stronger.”

Opportunities for European businesses of all sizes

Under the trade deal, India will grant the EU massive tariff reductions. According to the EU, tariffs on cars are gradually going down from 110 per cent to as low as 10 per cent, while they will be fully abolished for car parts after five to ten years. Tariffs ranging up to 44 per cent on machinery, 22 per cent on chemicals and 11 per cent on pharmaceuticals will also be mostly eliminated.

The deal will also help small EU businesses explore new export opportunities. Both sides will set up dedicated contact points to provide SMEs with relevant information on the FTA. SMEs will benefit from the tariff reductions, removal of regulatory barriers, transparency, stability and predictability provided by the Agreement.

Reducing agri-food tariffs

The agreement removes or reduces tariffs on EU exports of agri-food products, opening a massive market to European farmers, the EU said. Under the deal, Indian tariffs on wines will be cut from 150 per cent to 75 per cent at entry into force and eventually to levels as low as 20 per cent, tariffs on olive oil will go down from 45 per cent to 0 per cent over five years, while processed agricultural products such as bread and confectionary will see tariffs of up to 50 per cent eliminated.

However, sensitive European agricultural sectors such as beef, chicken meat, rice and sugar are excluded from liberalisation in the agreement.

The EU and India will also sign an MoU that intends to establish an EU-India platform for cooperation and support on climate action. The platform will be launched in the first half of 2026. Furthermore, subject to the EU's budgetary and financial rules and procedures, €500 million in EU support over the next two years is envisaged to help India's efforts to reduce greenhouse gas emissions and accelerate its long-term sustainable industrial transformation.