Talks about a Free Trade Agreement (FTA) between India and the European Union (EU) have now reached the final stage. India has made a big offer to reduce the tariff on cars coming from Europe, due to which this deal can be finalized quickly. It is noteworthy that this deal was stuck for a long time. But now it is about to be approved.
What is special in the deal between India and Europe?
India is ready to immediately reduce the current tariff of up to 110% on cars coming from Europe to 40%. This tariff may even drop to 10% over time for some high-end (premium) cars. This change will make European cars like BMW, Mercedes, Volkswagen and Audi much cheaper and easier to sell in the Indian market. Earlier these cars were very expensive due to such high duty.
What will India get from this?
Indian goods in Europe including textiles, garments, gems and jewellery, engineering goods and processed food will get better access and lower tariffs. Indian exporters will benefit greatly from this. EU wants more ease in wine, spirits, some services and other sectors in India. India has demanded mobility for skilled workers (ease of working in Europe) and better treatment for labour-intensive exports.
What is the reason for such a big deal between India and Europe?
This agreement between India and EU was stuck for 20 years. Now the political will from both sides is very strong. Talks are going on in full swing in New Delhi. Many technical chapters have been closed, only a few sensitive issues remain. If ‘agreement in principle’ is reached this week, it will be one of India’s biggest market openings. European Commission President Ursula von der Leyen and European Council President Antonio Costa are currently in Delhi. He participated as the chief guest on Republic Day on 26 January 2026. During this period, high-level meetings took place and the atmosphere is said to be very positive.
Who will get the benefits of this deal?
- For India: More investment will come, exports will increase and the supply chain will strengthen. India will take a stronger position in the global economy.
- For EU: You will get better access to a big and fast growing market like India. The supply chain will become more reliable.
- For consumers: European cars will be cheaper in India and more options will be available.
However, some Indian industries (which were protected by high tariffs) are worried about increased competition. Therefore, there may be a demand for transition period and safeguards. This deal is not just a trade deal but also the beginning of a deep economic relationship between India and Europe. The supply chain in the world is changing and this India-EU agreement will strengthen both. There may be a big announcement very soon.
