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Delhi: India and the European Union on Tuesday announced the completion of negotiations for a free trade agreement (FTA). An official said that under this agreement, many domestic sectors like apparel, chemicals and footwear will get duty-free entry into this group of 27 countries. At the same time, the European Union (EU) will get access to the Indian market at concessional tariffs for cars and wine. This agreement, concluded after negotiations lasting more than two decades, has been called the ‘largest ever’ agreement. This will create a market of about two billion people. Here we are going to tell you the main points of the FTA between India and the European Union.

Some important things to FTA
Except for automobiles and steel, almost all of India’s goods (more than 93 percent) will get zero-tariff entry into the EU. For the remaining items, Indian exporters will get duty cuts and quota-based duty concessions.
The agreement is a strategic breakthrough in the country’s global trade engagement, opening up huge opportunities in the $20 trillion EU market for 1.4 billion people.

With the implementation of this free trade agreement, the European Union will eliminate import duty on 90 percent of India’s goods on the first day.
The agreement is expected to be signed later this year and is likely to come into force in early 2027.
The EU will get duty-free access to 93 percent of its goods in India over a period of ten years.
India will remove duties on only 30 percent of European goods on the first day of implementation of the agreement. India is also offering duty concessions and quota-based reductions to the EU on 3.7 per cent of trade value. Overall, India is offering duty concessions to the EU on 97.5 per cent of the trade value.

Major zero-tariff Indian products include textiles, apparel, marine products, chemicals, plastics, rubber, leather, footwear, base metals, gems and jewellery, furniture, toys and sporting goods. Currently these sectors face tariffs ranging from 0 to 26 percent in the EU.
In the auto sector, both sides have negotiated quota-based duty concessions as EU demands are very aggressive in this sector.
India’s auto sector is largely dominated by small cars (Rs 10 lakh to Rs 25 lakh). The EU is not very interested in this segment.

Currently, India’s import duty on automobiles ranges from 66 percent to 125 percent. India will not give any duty reduction beyond the quota.
India’s quota for electric vehicles will start from the 5th year of the agreement. Tariff cuts for EVs will vary from segment to segment. In the first year it will be 35 percent in some segments and 30 percent in others. Then it will slowly go down.

Which things coming to India from Europe will be cheaper?
The imports from Europe to India include luxury cars, wine, spirits, beer, olive oil, kiwi, pears, fruit juices, processed foods such as bread, pastries, biscuits, pasta, chocolate, pet food, sheep meat, sausages and other meats. Currently, the tariff on these goods ranges from 33 percent to 150 percent. Premium luxury European cars like BMW, Mercedes, Lamborghini, Porsche and Audi are likely to become cheaper in the Indian market after the implementation of the FTA, as India will provide quota-based import duty concessions under this agreement. The EU will phase out duties for Indian automobiles, while India will reduce duties on EU cars from 110 per cent to 10 per cent, subject to a quota of Rs 2.5 lakh annually.

EU goods such as machinery and electrical equipment, aircraft and spacecraft, optical, medical and surgical equipment, plastics, chemicals, iron and steel, and pharma will get duty-free access to Indian markets. Due to which these things will also become cheaper. Duty on expensive wines imported from Europe will be reduced from 150 percent to 20-30 percent in 7 years. Tax on beer will be reduced from 110 percent to 50 percent and on spirits will be 40 percent. However, there will be no concession for wines worth less than 2.5 euros. With this, European wines, beer and spirits will also become cheaper in India.

European Union becomes India’s 22nd FTA partner
Let us tell you that the European Union has become the 22nd FTA partner of India. The NDA government has signed trade agreements with Mauritius, UAE, UK, EFTA, Oman and Australia since 2014 and has announced a trade agreement with New Zealand. India signed trade agreements with Oman and Britain in 2025 and announced the conclusion of a trade agreement with New Zealand.