The “mother of all deals”: that’s how European Commission President Ursula von der Leyen described the new free trade agreement between the European Union and India, announced on Tuesday after about two decades of negotiations.
The deal will affect a combined population of 2 billion people across economies representing about a quarter of global GDP.
Speaking in New Delhi, von der Leyen characterised the agreement as a “tale of two giants” who “choose partnership, in a true win-win fashion”.
So, what have both sides agreed to – and why does it matter so much for global trade?
What has been agreed?Under this agreement, tariffs on 96.6% of EU goods exported to India will be eliminated or reduced. This will reportedly mean savings of approximately €4 billion annually in customs duties on European products.
The automotive sector is the big winner. European carmakers – including Volkswagen, BMW, Mercedes-Benz and Renault – will see tariffs on their vehicles gradually reduced from the current punitive rate of 110% to as little as 10%.
The reduced tariffs will apply to an annual quota of 250,000 vehicles, which is six times larger than the quota the UK received in its deal with India.
To protect India’s domestic manufacturers, European cars priced below €15,000 will face higher tariffs, while electric vehicles get a...
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