The European Union and India have reached a landmark free trade agreement that will eliminate or sharply reduce tariffs on nearly 97 percent of EU exports, saving European companies up to €4 billion annually and significantly deepening economic ties between the two partners.
The deal, which also covers climate action, labor rights, and women’s empowerment, is expected to double EU exports to India by 2032 while expanding market access for Indian goods in Europe.
Announced by the 27-nation EU bloc, the agreement grants the EU tariff concessions that India has not extended to any other trading partner. Once formally signed later this year following legal vetting, the deal will rank among the most comprehensive trade accords India has concluded.
Under the agreement, steep duties on automobiles will be progressively reduced, with car tariffs falling from as high as 110 percent to as low as 10 percent over time, while tariffs on car parts will be abolished within five to ten years.
Levies on machinery, chemicals and pharmaceuticals will be largely eliminated, and agri-food tariffs—currently averaging over 36 percent—will see sharp reductions.
Indian duties on wine will drop from 150 percent to 75 percent initially and eventually to around 20 percent, while olive oil tariffs will fall to zero within five years.
Levies on processed foods such as bread and confectionery will be removed entirely. All imports into the EU, however, will continue to meet the bloc’s strict food safety standards.
The agreement also embeds sustainability commitments, including the launch of a new EU–India climate cooperation platform in 2026. A €500 million EU fund over two years is expected to support India’s efforts to cut emissions and accelerate sustainable industrial transformation.
On the European side, the EU will cut tariffs on 99.5 percent of goods traded over seven years. Indian exports set to benefit include marine products, leather goods, chemicals, rubber, base metals, and gems and jewelry, all of which will eventually enjoy zero tariffs.
The deal builds on decades of growing cooperation between India and the EU, whose ties date back to 1962 with the establishment of diplomatic relations with the European Economic Community.
Today, the EU is India’s largest trading partner in goods, with bilateral trade valued at about €120 billion in 2024.
Relations were elevated to a Strategic Partnership in 2004, marking its 20th anniversary in 2024, and have since expanded through the India–EU Trade and Technology Council launched in 2022, covering areas such as semiconductors, 6G research and artificial intelligence. Security and defense cooperation has also deepened, including joint naval exercises.
Earlier this month, German Chancellor Friedrich Merz underscored Europe’s broader strategic interest in closer ties with India, particularly on security and critical supply chains.
“The MoUs being signed today on all these issues will give new momentum and strength to our cooperation,” Indian Prime Minister Narendra Modi said following talks with Merz, reflecting the wider geopolitical and economic significance of the new trade pact.
