NEW DELHI: India will sharply cut some of its highest import duties—bringing car tariffs down from as much as 110% to as low as 10%, halving levies on European wines from 150% at entry into force and eliminating duties of up to 44% on machinery—after New Delhi and the European Union on Monday concluded negotiations on a landmark Free Trade Agreement (FTA).
According to a press statement issued by the European Commission, the deal is the most ambitious trade opening India has ever offered a partner, and is expected to significantly expand bilateral trade and investment between the world’s second- and fourth-largest economies. It comes at a time of heightened geopolitical tensions and global economic uncertainty, underlining a shared commitment to rules-based trade.
Under the agreement, India will eliminate or reduce tariffs on 96.6% of EU goods exports, a move the EU estimates will double its goods exports to India by 2032 and save European companies about €4 billion a year in duties. In return, European markets will open further to Indian exporters, while maintaining strict health, safety and regulatory standards.
One of the most closely watched elements is the automotive sector. Tariffs on imported European cars, currently among the highest in the world, will be reduced gradually from 110% to as low as 10% under a quota-based system, while duties on car parts will be fully abolished over five to ten years. The agreement is expected to reshape India’s tightly protected car market and give European automakers a strong competitive edge.
In industrial goods, tariffs of up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will largely be phased out, improving market access for EU manufacturers across sectors ranging from capital goods to healthcare.
Agriculture and food products also feature prominently. India will remove or cut steep tariffs—averaging more than 36%—on a wide range of EU agri-food exports. Duties on wines will be reduced from 150% to 75% when the agreement enters into force and further lowered to as little as 20% over time, while tariffs on olive oil will fall from 45% to zero within five years. Tariffs on processed foods such as bread and confectionery, currently as high as 50%, will be eliminated.
Sensitive European farm sectors, including beef, poultry, rice and sugar, are excluded from tariff liberalisation, and all Indian imports into the EU will continue to be subject to stringent food safety and health standards.
Beyond goods, the FTA opens up India’s services market to EU firms, with particularly ambitious commitments in financial services and maritime transport, and provides stronger protection for intellectual property rights. It also includes a dedicated chapter on trade and sustainable development, covering labour standards, climate action and environmental protection.
European Commission President Ursula von der Leyen called the agreement “historic,” saying it creates a free trade zone covering nearly 2 billion people and sends a signal that international cooperation can still deliver concrete economic gains.
Negotiations on the EU-India FTA were first launched in 2007, suspended in 2013 and formally relaunched in 2022. Following legal review, translation and approvals in the EU and India, the agreement is expected to be signed and ratified in the coming months, paving the way for it to enter into force.