Negotiations for the India-European Union Free Trade Agreement have been successfully completed, with Commerce Secretary Rajesh Agrawal confirming the official announcement scheduled for Tuesday. Agrawal praised the agreement as balanced and forward-looking, emphasizing its potential to enhance economic integration and boost trade and investment between India and the EU.
The Free Trade Agreement is set to be operational next year following a legal review process lasting around five to six months, culminating in the formal signing. Termed the ‘Mother of All Deals,’ this agreement is viewed as a significant move in expanding India’s global trade presence.
Agrawal highlighted the agreement’s potential to mitigate the impact of high US tariffs by creating new opportunities in the European market, particularly for Indian exports like textiles and jewelry. Notably, the pact will facilitate European car manufacturers’ access to India’s automobile sector, foreseeing a substantial reduction in import duties on European vehicles from 110% to approximately 40%.
European automakers such as Volkswagen, Mercedes-Benz, and BMW are expected to benefit from this tariff adjustment, making their cars more affordable for Indian consumers. The Indian auto sector, historically shielded, is currently dominated by Suzuki Motor, Mahindra, and Tata, with European companies holding a mere 4% share in the 4.4 million units annual market.
The European Union plays a pivotal role in India’s trade landscape, representing 17% of India’s total exports, while India accounts for 9% of the EU’s overseas shipments. In the fiscal year 2024–25, bilateral trade in goods between India and the EU reached $136.53 billion, with exports valued at $75.85 billion and imports at $60.68 billion, solidifying the EU’s position as India’s largest goods trading partner.
