Prime Minister Narendra Modi, European Commission President Ursula von der Leyen and European Council President Antonio Costa, on Tuesday jointly announced the conclusion of the India-European Union Free Trade Agreement (India-EU FTA) at the 16th India-EU Summit, held during the visit of the European leaders to India. The documents on the FTA conclusion were exchanged between EU Trade Commissioner Maros Sefcovic and Union Commerce Minister Piyush Goyal. This announcement marks a historic milestone in India-EU economic relations and trade engagement with key global partners.
The deal will strengthen economic and political ties between the world’s two largest democracies at a time of rising geopolitical tensions and global economic challenges.
India is the world’s fourth-largest economy with the world’s largest population. Despite this, EU exports there are relatively low compared to our exports elsewhere. This is due to very high tariffs among others.
The deal will reduce tariffs and administrative burdens, making trading easier, cheaper and faster. This will help EU companies and famers export more. EU exports to India already support 800,000 European jobs and the export growth can contribute to even more.
How is the agreement going to affect EU exports?
The agreement is expected to double EU exports to India. Additionally, enhanced access to the Indian services market, particularly in financial services, maritime services, and other key sectors, will open new business opportunities and foster job creation.
What are the key benefits for EU exporters under this agreement?
- Tariffs on over 90% of EU goods exports will be eliminated or reduced.
- Saving up to €4 billion per year in duties on European products.
- Competitive advantage for EU exporters, with the biggest trade opening India has given to any trade partner.
- Privileged access to India for EU service providers in key areas financial services and maritime services.
- Simplification of customs procedures to make exports quicker and easier.
- Protection of EU intellectual property such as trademarks.
- A dedicated chapter for small EU businesses.
How does the agreement benefit EU industry?
India will grant the EU tariff reductions that none of its other trading partners have received, dramatically improving market access for EU exports. For example, tariffs on cars will gradually go down from 110% to 10% with a quota of 250,000 vehicles a year. High tariffs of up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will be mostly eliminated.
Examples for EU industrial sectors that will benefit:
| Product | 2024 exports (EUR) | Current tariffs | Future Tariffs |
| Machinery and electrical equipment | €16.3 billion | Up to 44% | 0% for almost all products |
| Aircraft and spacecraft | €6.4 billion | Up to 11% | 0% for almost all products |
| Optical, medical and surgical equipment | €3.4 billion | Up to 27.5% | 0% for 90% of the products |
| Plastics | €2.2 billion | Up to 16.5%
|
0% for almost all products |
| Pearls, precious stones and metals | €2.1 billion | Up to 22.5%
|
0% for 20% of the products and tariff reduction for another 36% of the products |
| Chemicals | €3.2 billion | Up to 22% | 0% for almost all products |
| Motor vehicles | €1.6 billion | 110% | 10% (quota of 250k) |
| Iron and steel | €1.5 billion | Up to 22% | 0% for almost all products |
| Pharmaceuticals | €1.1 billion | 11% | 0% for almost all products |
How does the agreement benefit EU farmers?
The agreement removes or reduces often prohibitive tariffs (over 36% on average) on EU exports of agri-food products, opening a massive market to European farmers. Sensitive European agricultural sectors such as beef, sugar or rice will not be liberalized at all.
Examples for EU agri-food sectors that will benefit:
| Product | Current tariffs | Future Tariffs |
| Wine | 150% | 20% (premium range); 30% (medium range) |
| Spirits | Up to 150% | 40% |
| Beer | 110% | 50% |
| Olive Oil, margarine and other vegetable oils | Up to 45% | 0% |
| Kiwis and pears | 33% | 10% in-quota |
| Fruit juices and non-alcoholic beer | Up to 55% | 0% |
| Processed food (breads, pastries, biscuits, pasta, chocolate, pet food) | Up to 50% | 0% |
| Sheep meat | 33% | 0% |
| Sausages and other meat preparations | Up to 110% | 50% |
The EU and India are currently negotiating a separate agreement on Geographical Indications (GIs), which will help traditional EU farming products sell more in India, by removing unfair competition in the form of imitations.
How will the agreement help EU service providers?
The agreement will grant EU companies privileged access to the Indian services market, including key sectors such as financial services and maritime services. It has the most ambitious commitments on financial services by India in any trade agreement, going beyond what they have given to other partners.
How will the agreement help small businesses?
The deal has a dedicated chapter to help small businesses. They will be able to easily access all information on doing and setting up business in the EU and India. SME contact points will work on making trading easier for small companies. The tariff reductions, removal of regulatory barriers, transparency, stable and predictable rules will help companies import-export in a cheaper, simpler and more effective way.
How will the agreement promote sustainable trade?
Dedicated sustainability provisions will:
- enhance environment and climate protection
- promote the protection of workers’ rights and support women’s empowerment
- strengthen dialogue and cooperation
- ensure effective implementation mechanism
How will the agreement protect workers’ rights and women’s empowerment?
The agreement requires respect for the core International Labor Organization principles and includes legally binding commitments on issues such as decent working conditions, labor inspection, and responsible business conduct. It contains provisions on UN and ILO conventions advancing women’s economic empowerment and gender equality.
How will the agreement support the green transition?
Both the EU and India commit to work together on climate change issues and the sustainable management of natural resources and to work towards implementing agreements such as the Paris Agreement, the Convention on Biological Diversity and the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
How will the sustainability commitments in the agreement be enforced?
Many of the commitments on Trade and Sustainable Development are legally binding and enforceable through a dedicated consultation mechanism. The mechanism will provide an avenue to address labour, environmental and gender equality issues in a sustainable and inclusive matter, so that improvement is achieved on the ground, and not just on paper.
How will the deal avoid that products of non-Indian origin are imported into the EU through India just to benefit from the tariffs?
The EU and India have agreed rules of origin that ensure that only products that have been significantly processed in one of the parties can benefit from the tariff preferences of the agreement. This will help avoid other countries simply exporting to India and re-exporting to the EU benefiting from the tariffs.
What does the FTA do to cut red tape?
The EU and India agreed simplified procedures, to maintain a transparent and predictable regulatory environment and ensure quicker release of goods at customs. These will all make actual exporting/importing easier, quicker and cheaper. We also agreed with India to deepen cooperation on supply chain security and to strengthen risk management and controls at the EU border.
How does the deal protect EU health and safety?
All imports from India to the EU will continue to be subject to the EU’s strict health and product safety rules, with no exception. The EU is ensuring compliance through controls.
Furthermore, the deal creates a framework to cooperate on strengthening policies and defining programs that contribute to the development of sustainable, inclusive, healthy and resilient food systems and to jointly engage in the transition towards sustainable food systems.
How does the agreement promote digital trade?
The chapter on digital trade contributes to a predictable, secure, and fair digital trade environment. It provides rules that build consumer trust and ensure legal certainty for business and support innovation while maintaining the right to regulate for public policy, privacy, and security and deepening EU-India cooperation in the digital economy.
How does the agreement ensure the protection of intellectual property?
The agreement provides a high level of protection and enforcement of intellectual property rights, including with respect to copyright, trademarks, designs, protection of trade secrets and undisclosed information, plant varieties. It also requires measures, procedures and remedies to ensure the enforcement of intellectual property rights.
How does the deal help address disagreements on trade?
The so-called “dispute settlement” mechanism will help avoid or settle efficiently any disagreement concerning the agreement. Independent panels will decide on the disputes. A pre-established list of experts will ensure that panels can start working quickly. Panel reports will be binding and can be enforced through suspension of concessions. All procedures and hearings will be fully transparent. Mediation is also possible, making the process even quicker.
