India and the European Union on Tuesday announced the conclusion of negotiations for the free trade agreement, described as ‘mother of all deals’, under which EU exports to India are expected to double.
Under the deal, the 27-nation bloc EU has agreed to reduce tariffs by up to €4bn annually for exporters of all sizes. As part of a number of provisions in the deal, tariffs will be eliminated or reduced on over 90% of EU goods exports.
On the other hand, EU exports to India are expected to double. As per a statement released by the European Commission, India has agreed to cut tariffs on wines from 150% to 75% at entry into force and eventually to levels as low as 20%, while tariffs on olive oil will go down from 45% to 0% over five years.
The negotiations for the India-EU deal got a new impetus after U.S. President Donald Trump’s trade tactics, including threatening his European allies with punitive tariffs over their objections to Trump’s threats to take control of Greenland.
For the EU, the deal offers the bloc expanded access to one of the world’s fastest-growing major economies, and helps European exporters and investors reduce their reliance on more volatile markets.
This deal is the largest trade agreement ever reached by either the European Union or India. The Commission president Ursula von der Leyen underlined the magnitude of this deal in her joint statement with president of the European Council António Costa and Indian prime minister Shri Narendra Modi, declaring: “We did it. We have delivered the mother of all deals. We are creating a market of 2 billion people. This is a tale of two giants – the world’s second- and fourth-largest economies. Two giants who choose partnership in a true win-win fashion. A strong message that cooperation is the best answer to global challenges.”
Together, the European Union and India represent almost one fifth of global trade and around 25% of the global population.
The EU is the second largest trading partner for India – right after China and ahead of the United States – accounting for 11.5% of India’s trade in goods.
Marine Exports to get a Major Boost
Preferential access covering 100% of trade value, by reducing tariffs of up to 26% will unlock the EU marine market for imports ($53.6bn)). This enhanced market access is expected to significantly improve the competitiveness of India’s marine exports, while complementing and strengthening India’s export capacity in the marine sector, currently valued at $1bn to the EU.
The FTA will turbo-charge exports of shrimp, frozen fish, and value-added seafood exports, empowering coastal communities in Andhra Pradesh, Gujarat, Kerala, and beyond and India’s blue economy.
