In a landmark development for global trade, India and the European Union (EU) have officially announced the conclusion of their Free Trade Agreement (FTA) negotiations, while after 18 years of rigorous discussions, the deal was sealed during the 16th India-EU Summit on Tuesday. Dubbed the 'Mother of All Deals,' this agreement is set to transform the economic landscape between the world's largest democracy and the 27-nation European bloc, opening up unprecedented opportunities for growth, innovation, and strategic partnership.
Massive Price Drop for Luxury Cars and Spirits
One of the most significant highlights of the FTA is the drastic reduction in import duties on luxury goods, while for years, European car manufacturers like BMW, Mercedes-Benz, and Audi faced a daunting 110% tax in India. Under the new agreement, this tariff will be slashed to just 10%, while to balance domestic interests, a quota of 2. 5 lakh vehicles per year has been established. Similarly, the high 150% tariff on European wines and spirits will be reduced to a range of 20-30%, making premium European beverages far more accessible to Indian consumers.
PM Modi and Ursula von der Leyen Celebrate the Milestone
Prime Minister Narendra Modi hailed the agreement as a 'new chapter' in India-EU relations. He noted the poetic coincidence of signing the deal with 27 EU nations on the 27th of January. PM Modi emphasized that the FTA is a roadmap for shared prosperity, aimed at strengthening global supply chains and fostering innovation. European Commission President Ursula von der Leyen shared the enthusiasm, stating, 'PM Modi, we did it, while we've concluded the largest agreement ever. ' She described the deal as a win-win for both powers, promising millions of new jobs and enhanced economic security.
Antonio Costa’s Personal Connection to India
The summit also saw an emotional address from European Council President Antonio Costa, who proudly identified himself as an Overseas Citizen of India (OCI). With roots in Goa, Costa expressed that the relationship between Europe. And India isn't just official but deeply personal for him. He lauded India's diversity, which he witnessed firsthand as the chief guest at the Republic Day celebrations, and. Stated that the FTA marks a strategic level of trust that will define the future of multipolar global order.
Zero Tariffs on Essential Goods and Food Items
The trade deal goes beyond luxury items, offering significant benefits for the average household, while india has agreed to eliminate tariffs entirely on several products, including olive oil, margarine, and vegetable oils. Taxes on fruit juices, processed foods, pasta, and chocolates have also been scrapped. Plus, the agreement slashes duties on chemicals (up to 22%), pharmaceuticals (up to 11%), and machinery (up to 44%). This move is expected to lower the cost of medicines and industrial equipment, boosting India's manufacturing sector.
A Strategic Defense and Green Energy Partnership
Beyond commerce, the India-EU FTA incorporates a strong Security and Defense Partnership. PM Modi highlighted that defense cooperation is the foundation of any strategic alliance, and this deal will enable co-development and co-production between defense companies. Also, the EU has pledged €500 million (approximately ₹4,500 crore) over the next. Two years to support India's green energy initiatives and greenhouse gas reduction goals. The agreement also includes specialized chapters for Digital Trade and Small and Medium Enterprises (SMEs),. Ensuring that small businesses can navigate the international market with ease through dedicated contact points.
Strengthening the Global Supply Chain
The agreement also focuses on the India-Middle East-Europe Economic Corridor (IMEC), which both parties have committed to advancing, while in an era of global geopolitical shifts, the India-EU partnership stands as a pillar of stability. By reducing strategic dependencies and creating a rules-based economic environment, the FTA aims to benefit over 2 billion people across both continents. This historic deal isn't just about trade; it's about building a resilient, sustainable, and prosperous future for the global community.