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India and the European Union (EU) have successfully concluded negotiations for the proposed Free Trade Agreement (FTA), commerce secretary Rajesh Agrawal announced on Monday. He described the deal, which is set to be formally announced on January 27, as “balanced and forward-looking,” aimed at deepening India’s economic integration with the EU. Under the agreement, tariffs on European car imports, currently as high as 110%, will be immediately reduced to 40%, with potential reductions to 10% over time for certain premium models. This will make European cars such as BMW, Mercedes, Audi, and Volkswagen significantly more affordable for Indian buyers.
Indian Exporters Gain, EU Access
The FTA also promises substantial benefits for Indian exporters. Products such as textiles, garments, gems and jewelry, engineering goods, and processed food will enjoy better market access and reduced duties in Europe. In return, the EU seeks improved access to certain services, wine, spirits, and greater mobility for skilled workers in India. The deal marks the culmination of more than 20 years of stalled negotiations, driven now by strong political will on both sides. Several technical chapters have already been closed, with only a few sensitive issues remaining.
Momentum Builds For India-EU Deal
High-level meetings held during India’s Republic Day celebrations, including European Commission President Ursula von der Leyen and European Council President Antonio Costa, have contributed to a positive momentum toward finalisation. Commerce Secretary Agrawal emphasised that the agreement will strengthen supply chains, attract more investment, and expand India’s exports, enhancing the country’s position in the global economy. European companies will gain access to India’s fast-growing market, while Indian consumers will benefit from a wider choice of cars at lower prices.
Despite the benefits, some Indian industries previously protected by high tariffs may face increased competition, potentially requiring transition periods or safeguard measures. Beyond trade, the FTA signifies a deeper economic partnership between India and Europe, reflecting evolving global supply chains and long-term cooperation.
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