In commercial transactions, they also ended up creating a common market of about 2 billion people, which corresponds to 25% of the world’s GDP. This agreement is called by many – including its president Ursula von der Leyen – as “the mother of all agreements”, because of its historic character and its importance for both parties.
After 20 years of bogged down negotiations, the deal was reached amid efforts by the EU and India to offset tariffs by the US government under Donald Trump, as well as massive exports from China.
A mammoth deal worth 180 billion euros per year
The European Commission, which is responsible for trade negotiations, estimates that trade in goods and services between the EU and India is worth more than €180 billion a year, supporting more than 800,000 jobs in the EU. The agreement is expected to increase European exports to India by 100% by 2032 by reducing or eliminating tariffs entirely. According to the Commission, the tariff reductions will save around 4 billion euros every year on European products.
The Commission notes that this is the most ambitious trade deal India has ever awarded to a trading partner, giving European companies an advantage in entering the world’s largest and fastest growing economy. India, with a population of 1.45 billion people, is considered a strategic trade destination for the EU.
The goal is to drastically reduce tariffs
The agreement includes significant tariff reductions for EU agri-food products such as wine, olive oil and processed agricultural products. For example, Indian tariffs on wine from the EU will be reduced from 150% to 75%, and in future to 20%, while on beer from 150% to 50%. On olive oil, tariffs will be reduced from 45% to 0% within five years, while tariffs on processed agricultural products such as bread and sweets will be reduced by up to 50%. Importantly, products related to beef, chicken, rice and sugar are excluded from the liberalization, ensuring protection for sensitive sectors of European agriculture.
All imports from India will continue to comply with the EU’s strict food health and safety rules. At the same time, a separate agreement on Geographical Indications (GIs) is being negotiated, which will protect traditional European agricultural products from counterfeiting in the Indian market, boosting exports of products with a specific geographical origin.
India will offer the EU tariff reductions that it has not granted to its other trading partners. European exports of machinery and electrical equipment, amounting to €16.3 billion, will see the tariff reduced from 44% to 0% over 5-7 years. Also, tariffs for aircraft, which amount to 11%, will be reduced to zero, while for medical and surgical equipment products, which are currently at 27.5%, they are expected to drop to 0%.
Plastics and chemicals, worth €2.2 billion and €3.2 billion respectively, will see tariff reductions of up to 0% within 10 years.
And Greek interest
As part of the agreement, products of interest to the Greek market are also included, such as wine, hard spirits, olive oil and kiwifruit. Greece, as the third largest exporter of kiwifruit in the world, is expected to benefit significantly from the tariff reductions. On kiwifruit and pears, tariffs will be reduced from 33% to 10%. Processed foods such as breads, pastries, biscuits, pasta and chocolates will also benefit from zero duties, while duties on fruit juices and non-alcoholic beers will also be reduced.
Services and Intellectual Property in the Agreement
The agreement also covers the field of services and intellectual property. It provides European companies with preferential access to Indian service markets, with a focus on the financial services and maritime transport sectors. At the same time, the agreement ensures high protection for intellectual property rights, such as copyright, trademarks, designs and trade secrets.
The European Commission is expected to publish the texts of the agreement for legal examination and translation into official EU languages, before submitting them to the Council of the EU. Once approved by the Council, the agreement will be signed by both sides and will require the approval of the European Parliament before entering into force.
With this historic agreement, European businesses gain a strong foothold in the Indian market, while India gains access to EU technologies and products, strengthening cooperation between the two regions.
