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India-EU sign trade deal: What's getting cheaper for you
27 Jan 2026

India and the European Union (EU) have signed a major free trade agreement (FTA) today.

This pact, referred to as "mother of all deals, has been in the works for years. It aims to eliminate or reduce tariffs on 97% of EU exports to India while boosting exports from India to the 27-member EU bloc.

For the Indian consumer, this means several premium categories are set to become significantly more affordable as the deal is implemented.

Luxury cars and electric vehicles
Lower duty on cars

European luxury car brands like Mercedes-Benz, BMW, and Volkswagen are major winners. Historically, India charged up to 110% duty on imported cars.

Under the new deal, tariffs on a quota of 250,000 vehicles will drop to 10% over five years.

For Electric Vehicles (EVs), the duty will gradually fall to 10% by the tenth year, making high-end European green tech more accessible to Indian buyers.

Tariffs will also be fully abolished for car parts after five to 10 years.

Wines, spirits, and beer
Alcohol duties

The "toast" of the deal is the massive reduction in alcohol duties. Tariffs on premium European wines will plummet from 150% to 75% at entry into force and eventually to levels as low as 20%.

Spirits like Scotch whisky, vodka, and gin will see duties cut to 40%, while the tax on European beer will drop from 110% to 50%.

Expect a significant price drop for French wines and Italian prosecco at your local boutique liquor store.

Gourmet food and olive oil
Food tariffs

Duties on olive oil, which were previously 45%, will be completely eliminated (0%) over five years.

Other processed agricultural products, including European cheeses, chocolates, biscuits, and fruit juices, will see tariffs of up to 50% abolished.

While sensitive Indian sectors like dairy and sugar remain protected, European pantry staples will become much more budget-friendly for Indian households.

The EU and India are also working on a Geographical Indications pact aimed at protecting iconic EU farm products from imitations in India.

Pharmaceuticals and medical gear
Tariff reduction

India is a pharmacy to the world, but many life-saving drugs and high-end medical devices are still imported from Europe.

The FTA slashes duties on medical equipment and specialized pharmaceuticals from up to 11% to zero for almost all products.

This reduction in input costs and import levies is expected to lower the price of advanced diagnostic machinery and certain patented medicines, providing direct relief to patients and the Indian healthcare infrastructure.

Industrial machinery and space tech
Trade expansion

This deal also significantly bolsters "Make in India." Tariffs on machinery and electrical equipment will plummet from 44% to 0%, while duties on aircraft and spacecraft also drop from 11% to zero.

By slashing costs for high-end components and capital goods, the agreement makes setting up advanced manufacturing units far more affordable.

Ultimately, as Indian factories source cheaper European technology, consumers will benefit from more competitively priced, domestically produced electronics and engineering products, fueling long-term industrial growth across the country.