India and the European Union reached a long-awaited trade deal that will cut tariffs on many goods, aiming to boost bilateral trade and reduce reliance on the United States amid rising global trade tensions.
The agreement is expected to double EU exports to India by 2032 by eliminating or reducing tariffs on 96.6% of traded goods by value, saving European companies an estimated €4 billion ($4.75 billion) in duties.
India will reduce tariffs on 99.5% of EU imports over seven years, with immediate cuts to zero for Indian marine products, leather, textiles, chemicals, rubber, base metals, and gems and jewellery. Agriculture items such as soya, beef, sugar, rice, and dairy remain outside the deal.
“Yesterday, a big agreement was signed between the European Union and India,” Indian Prime Minister Narendra Modi said, calling it “the mother of all deals” that will create opportunities for 1.4 billion Indians and millions in Europe.
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The EU-India deal comes after two decades of trade talks, gaining momentum following U.S. tariffs on some Indian goods. The pact follows similar EU agreements with Mercosur, Indonesia, Mexico, and Switzerland, while India recently finalised deals with Britain, New Zealand, and Oman.
“Europe and India are making history today. This is only the beginning,” said European Commission President Ursula von der Leyen.
Bilateral trade between India and the EU stood at $136.5 billion for the fiscal year through March 2025, compared to $132 billion with the U.S. and $128 billion with China. The formal signing is expected after a five- to six-month legal review, with implementation likely within a year.
Opening Up Key Sectors
The deal opens India’s highly guarded market, including a phased reduction of car tariffs from as high as 110% to 10% over five years, benefiting European automakers such as Volkswagen, Renault, Mercedes-Benz, and BMW.
Tariffs on wines will drop from 150% to 75% immediately, then gradually to 20%, while spirits will fall to 40%. EU imports of machinery, electrical equipment, chemicals, and iron and steel will also see reduced tariffs.
While Indian companies face the EU’s new Carbon Border Adjustment Mechanism (CBAM), which applies to steel, cement, electricity, fertilisers, and other products, India has secured a commitment that it will receive flexibilities if other third countries are granted exemptions.
Additionally, the EU will provide €500 million in financial support over two years to help India reduce greenhouse gas emissions.
Esther Ososanya is an investigative journalist with Pinnacle Daily, reporting across health, business, environment, metro, Fct and crime. Known for her bold, empathetic storytelling, she uncovers hidden truths, challenges broken systems, and gives voice to overlooked Nigerians. Her work drives national conversations and demands accountability one powerful story at a time.
