India and Europe on Tuesday announced sealing of an ambitious free trade agreement - billed as "mother of all deals" - that came against the backdrop of a fractious global environment and trade disruptions largely caused by Washington's policy on tariff. This will be the 19th trade deal for India. The FTA will help boost the country's exports to the 27-nation bloc. As part of the agreement, EU will eliminate duty in a phased manner for Indian automobiles, whereas India will reduce the levies to 10 per cent for specified numbers. Here's everything you need to know about the deal in 10 points.
1. FTA to make premium luxury cars less expensive
The EU will eliminate duties on Indian automobiles in a phased manner, whereas India will reduce levies to 10 per cent for specified numbers.
2. European wines to get less expensive
European wines are set to enter the Indian market at lower prices under the bilateral free trade agreement as India will provide import duty concessions under the pact. Under the pact, the duty on EU wines would fall from 150 per cent to 20 per cent (for expensive ones).
3. Tariffs, import duties reduced
Tariffs or import duties are either reduced or eliminated under an FTA. Therefore, an FTA will open markets, align regulatory frameworks, and benefit key industries such as technology, pharmaceuticals, automobiles, and textiles.
4. FDI inflows
India's cumulative FDI inflows from the EU from April 2000 to September 2024 totalled USD 117.4 billion, with about 6,000 EU firms operating in India. FDI from the EU accounted for 16.6 per cent of the cumulative FDI equity inflows from all countries, which stood at USD 708.6 billion.
5. Bilateral trade
It is a cornerstone of the India-EU relationship, with total trade surpassing USD 190 billion in FY 2025. India exported USD 75.85 billion in goods and USD 30 billion in services to the EU, while the EU exported USD 60.68 billion in goods and USD 23 billion in services to India.
6. Defence partnership
India also signed a Security and Defence Partnership with the EU, making it the third Asian country to have such a deal after Japan and South Korea.
7. Negotiations relaunched in 2022
The EU and India had first launched negotiations for the FTA in 2007, before the talks were suspended in 2013 due to a gap in ambition. The negotiations were relaunched in June 2022.
8. Strategic partners since 2004
India and the European Union have been strategic partners since 2004. The proposed Security and Defence Partnership (SDP) will facilitate deeper defence and security cooperation between the two sides.
9. India-EU trade exceeds €180 billion annually
Currently, trade between India and the EU exceeds €180 billion annually, supporting approximately 800,000 EU jobs. Under this agreement, tariffs on 96.6% of EU products in India will be reduced or eliminated, which is expected to double EU exports to India by 2032. The tariff reductions are expected to result in annual duty savings of approximately €4 billion on European products.
Zero tariff on 90% EU products
Under this agreement, more than 90 per cent of EU products exported to India will be subject to reduced or zero tariffs. This is estimated to save European exporters approximately €4 billion annually, the direct benefit of which is likely to accrue to Indian consumers and domestic industries in the form of lower prices and improved input costs.
