India and EU seal historic trade deal to cut tariffs and expand trade

India and the European Union (EU) reached a long-delayed trade agreement on Tuesday that will reduce tariffs on the vast majority of goods traded between the two economies, with the aim of boosting bilateral trade and lessen dependence on the United States against a backdrop of rising global trade tensions, the two sides reported.

According to the EU, the pact will eliminate or reduce tariffs on 96.6% of European exports to India by value, which would double the bloc's exports to the Indian market by 2032 and generate estimated savings of €4 billion annually in tariffs for European companies.

For its part, the EU pledged to reduce tariffs to 99.5% of products imported from India over a period of up to seven years. Indian products such as textiles, leather, marine products, chemicals, rubber, base metals, gems and jewelry will be duty-free, according to the Indian Commerce Ministry.

However, both sides left sensitive agricultural products such as soybeans, beef, sugar, rice and dairy out of the deal, reported Reuters.

"Europe and India are making history today. This is just the beginning," said European Commission President Ursula von der Leyen, while Indian Prime Minister Narendra Modi called the pact "the mother of all deals," highlighting its impact for India's 1.4 billion people and millions of Europeans.

Opening up key sectors

One of the most relevant points of the agreement is the drastic reduction of Indian tariffs on European automobiles from up to 110% to just 10% within five years, benefiting manufacturers such as Volkswagen, Renault, Mercedes-Benz and BMW. Initially, levies will be reduced to 30%-35%, with an annual quota of 250,000 vehicles valued at more than €15,000.

India also agreed to reduce wine tariffs from 150% to 75% immediately, and gradually to 20%, while taxes on spirits will drop to 40%.