The agreement was reached for signature after 20 years of negotiations. New Delhi this morning an agreement was signedfree trade agreement between the'European Union and India, which opens a market of over 2 billion consumersThe President of the European Commission Ursula von der Leyen called it “the mother of all trade deals” and the Indian Prime Minister Narendra Modi “the largest trade deal ever” for the Subcontinent, a “historic” agreement which will “push investments between the EU and India and will strengthen supply chains at a global level. It is not a simple agreement, but a project of shared prosperity."
"L 'Europe and India "They are writing a page of history today," said the EU president. "We have concluded the most important agreement ever. We have created a free trade area involving two billion people, with benefits for both sides. This is just the beginning. We will further strengthen our strategic relationship."
The new trade agreement, which will come into force after theCouncil approval , ratification by the European Parliament, represents a further sign of the strategy of the EU of diversify business partners in times of growing tensions, especially with the United States. To avoid falling into the same obstacles as the agreement with Latin American countries with the EU-Mercosur treaty, the European products most exposed to export competition, namely beef and chicken meat, sugar, rice, powdered milk, honey, bananas, soft wheat, garlic and ethanol, have been excluded from the agreement. Less than a week after the historic signing of the free trade agreement between the European Union and the countries of the Mercosur The agreement was halted by the European Parliament and referred to the European Court of Justice.
Eliminating tariffs. Here are the crucial issues resolved.
“It is expected that the business current of goods and services will double within five or six years" he said this morning EU Trade Commissioner Maros Sefcovic. Overall “lIndia to reduce tariffs by 97% (total or partial), while the'EU will reduce them by 99%".
I two crucial points remained on the discussion table until the last minute, on the EU front, concerning the elimination of the heavy 110% duties on imports of European cars in India, and on the Indian one, the export of steel (7% of Delhi's exports to Europe).
In the end, it was found a compromiseThe European Union has not achieved full liberalization of exports of , but a quota of 250.000 vehicles per year with a 10% tariff. India was granted zero-duty exports of an annual quota of 1,6 million tons of steel. Delhi had also requested an exemption from the climate tariff (imposed on producers in third countries with higher emissions). Europe did not give in, but offered the possibility of a "technical dialogue" with Indian companies and a promise not to treat them worse than other EU trading partners.
In general, 90% of the entry duties to the Indian market, which now reach up to 150% (for example for the wine and spirits, 110% for the beer, sausages and other products derived from carne) will drop to much more reasonable percentages, between 10 and 50%, and in some cases they will even reach zero (for example for fruit juices, biscuits, pasta, chocolate, olive oil and other vegetable oils, margarine).
The abolition of duties will be gradual and sector-specific: for example for car parts it will reach zero in five years, and for some components in ten. As regards the whole cars, Within one year of the treaty's entry into force, the current tariffs of 110% will be reduced to 10%, for an annual quota of 250 cars sold. Duties on machinery (now at 44%), those on aircraft (from the current 11%), the plastics, optics, metals, chemicals, iron and steel, and pharmaceuticals.
The agreement will bring savings of €4 billion for European businesses.
Currently, only 0,6% of European agri-food exports reach India, so the benefits will be significant. According to the Commission, the agreement will lead to a savings for European businesses equal to 4 billion eurosA separate agreement for the protection of PGI products is also under consideration.
The treaty includes a separate chapter for SMEs, also to eliminate overly complicated procedures that limit access to those with limited organizational structures.
The India, the world's fourth largest economy, set to become the third by 2030, and Europe's ninth largest trading partner, has 1,45 billion inhabitants. Delhi had attempted a trade deal with the US, which then foundered due to the draconian policies of Donald Trump who actually hit it with 50% tariffs because of India's purchases of Russian oil.
Currently there are 6.000 EU companies operating in the subcontinent. In 2024, trade between the EU and India reached €120 billion, equal to 12% of total Indian trade, plus another €60 billion in services, doubling the €30,4 billion in 2020. EU direct investment in India reached €140 billion in 2023. The EU is Delhi's largest trading partner, while India is the ninth largest for Europeans (2,2% of the total).
The corollaries of the agreement: from security to employment to the environment
In addition to the trade agreement, a Memorandum of Understanding, to develop green technologies. In particular, a task force will be launched ongreen hydrogen. Furthermore, a “strategic agenda” is foreseen for the next five years which will promote initiatives on sustainability, mobility and connectivity.
Also noteworthy is the signing of the agreement for an EU-India partnership on defense and security. A memorandum of understanding was also adopted for cooperation on mobility, in particular to enable theinflux of Indian workers especially those highly qualified and seasonal (for sectors suffering from staff shortages). Finally, the'Strategic Agenda 2030 EU-India global.
