EU, India conclude free trade agreement

The European Union and India concluded a free trade agreement on Tuesday in New Delhi, creating the largest free trade zone in the world.

“Today, the EU and India are making history by deepening the partnership between the world’s largest democracies. We have created a free trade zone for two billion people, and both sides will benefit economically,” said European Commission President Ursula von der Leyen.

The agreed draft of the agreement now needs to undergo legal review and be translated into all official EU languages, CE Report quotes HINA.

After that, the Commission will submit its proposal to the Council for signing and conclusion of the agreement. Once the Council adopts the agreement, the EU and India can sign it. For the agreement to enter into force after signing, it will require the consent of the European Parliament and a decision of the Council.

Indian Prime Minister Narendra Modi said that “a major agreement between the European Union and India has been signed. People around the world are calling this the mother of all deals. This agreement will bring great opportunities for 1.4 billion people in India and millions in Europe.”

The EU and India are the second- and fourth-largest economies in the world. Trade between the two sides has so far exceeded €180 billion annually, and this agreement is expected to double EU goods exports to India by 2032 by eliminating or reducing tariffs on 96.6% of EU exports to India. Overall, tariff reductions are expected to save around €4 billion annually on duties for European products, according to the Commission.

The signed agreement is the largest India has ever concluded with any trade partner. The agreement is expected to give European companies privileged access to the world’s most populous country, with 1.45 billion people, and its fastest-growing large economy, with an annual GDP of €3.4 trillion.

The agreement foresees tariff reductions on European products that no other Indian trade partner has received. For example, tariffs on cars will gradually decrease from 110% to just 10%, while tariffs on automotive parts will be fully removed after five to ten years. Tariffs of up to 44% on machinery, 22% on chemicals, and 11% on pharmaceutical products will also largely be eliminated.

The agreement also provides for the elimination or reduction of high tariffs on agricultural and food exports from the EU, opening a huge market for European farmers. The current average tariff on these products is 36%. For instance, Indian tariffs on wine will drop from 150% to 75% when the agreement enters into force, and could later fall to 20%. Tariffs on olive oil will gradually decrease from 45% and reach zero within five years.