India and the European Union (EU) announced the conclusion of negotiations for a Free Trade Agreement (FTA) on Tuesday, 27 January at the 16th India–EU Summit.
The FTA, often described as “the mother of all deals”, seeks to “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, highlighting their joint commitment to economic openness and rules-based trade,” the official statement read.
Here are the key details of the FTA outlining what the EU and India are offering each other, including tariff differences before and after the proposed deal —
What is EU offering India?
Under the FTA, India will gain preferential access to European markets for 97% of tariff lines, representing 99.5% of its trade value. Around 90.7% of India’s exports will benefit from immediate duty elimination in key labour-intensive sectors such as textiles, leather and footwear, tea, coffee, spices, sports goods, toys, gems and jewellery, and certain marine products, according to a statement by the Ministry of Commerce.
Nearly 2.9% of Indian exports will gain zero-duty access within 3 to 5 years for specific marine products, processed foods, arms, and ammunition, among others. Additionally, 6% of goods will receive preferential access through tariff reductions, covering certain poultry, preserved vegetables, bakery items, and other products.
Around 33 billion in exports currently subject to import duties of 4% to 26% in the EU will enter duty-free from the entry into force of the FTA and thus gain enhanced competitiveness in the EU market.
What is India offering the EU?
India provides access to 92.1% of its tariff lines, accounting for 97.5% of EU exports. Nearly half of these lines, 49.6%, will have their duties eliminated immediately, while 39.5% will undergo phased eliminations over 5, 7, and 10 years. Additionally, 3% of products are set for phased tariff reductions, with some items, such as apples, pears, peaches, and kiwi fruit, subject to trade rate quotas (TRQs).