India, EU sign ‘mother of all deal’: cars, chocolates, wines, olive oil will get cheaper

Building on the landmark conclusion of the IndiaEU Free Trade Agreement announced today, the deal promises substantial economic gains through sweeping tariff reductions and eliminations. The pact, described as the "mother of all deals," will create a massive integrated market of nearly 2 billion people, with tariff cuts designed to boost exports, lower consumer prices, and enhance supply chain integration for both sides.

The agreement eliminates or reduces tariffs on 96.6% of EU goods exports to India (by value), saving up to €4 billion annually in duties, while granting over 93% of Indian exports zeroduty access to the EU (with phased concessions or quotas in sensitive areas like autos and steel). Bilateral goods trade, currently around $136180 billion, is expected to surge, with EU exports to India potentially doubling by 2032.

Key Sectors Benefiting from Tariff Reductions

For India

• Textiles, Apparel, and Garments — Currently facing ~10% EU duties, these labourintensive sectors will see major reductions or eliminations, boosting competitiveness against rivals like Bangladesh and Vietnam. This could significantly increase exports and create jobs in India's largest manufacturing employer.
• Chemicals and Pharmaceuticals — Tariff cuts (from averages around 3.810%) will enhance access for organic chemicals, specialty chemicals, generics, and pharma products, potentially doubling exports in key subsectors and diversifying markets beyond the US.
• Leather Goods, Footwear, and Jewellery/Gems — Dutyfree or preferential access will support these exportoriented industries, with gems, jewellery, and leather products gaining a competitive edge in the premium EU market.
• Electronics, Machinery, and Auto Components — Reduced barriers will aid machinery, electrical equipment, and components, lowering input costs and improving export potential.
• Other Beneficiaries — Marine products, processed foods, and certain ITenabled services will also see improved market entry.

For the EU

• Machinery and Electrical Equipment — Tariffs up to 44% largely eliminated, benefiting €16+ billion in annual exports and making European industrial goods more competitive in India.
• Chemicals — Duties up to 22% mostly removed, opening doors for a €3+ billion export sector.
• Automobiles and Motor Vehicles — High tariffs (up to 110%) phased down to as low as 10% (with quotas, e.g., 250,000 units), enabling luxury and premium European cars to become more affordable and accessible in India's growing market.
• Pharmaceuticals — Tariffs around 11% eliminated for most products.
• Aircraft and Aerospace — Full elimination of duties (previously up to 11%), boosting highvalue exports.
• AgriFood and Beverages — Prohibitive tariffs (averaging over 36%) slashed or removed on wines and spirits (from 150% to ~2040%), beers, olive oil, margarine, vegetable oils, fruit juices, processed foods, confectionery, and other items, making European gourmet products more pricecompetitive.
• Other Industrial Goods — Iron and steel (up to 22% → mostly 0%), optical/medical/surgical equipment (up to 27.5% → 0% for most), and more.
  
  
  

The FTA also includes provisions for services market access (e.g., financial and maritime services for EU firms), SME support, sustainability cooperation, and regulatory alignment to ease nontariff barriers. While sensitive sectors like agriculture (dairy, poultry) remain protected on the Indian side, the overall balance is seen as mutually beneficial.

Implementation awaits legal finalization, ratification by the European Parliament, and domestic approvals, likely starting in late 2026 or 2027. Analysts view the deal as a strategic counter to global trade disruptions, strengthening ties between Asia's fastestgrowing economy and the world's largest single market.