The European Union and India have announced a landmark trade deal after nearly two decades of on-off talks, as both sides aim to deepen ties amid tensions with the US.
“We did it, we delivered the mother of all deals,” European Commission President Ursula von der Leyen said at a media briefing in Delhi. Indian Prime Minister Narendra Modi called the deal “historic”.
It will allow free trade of goods between the bloc of 27 European states and the world’s most populous country, which together make up nearly 25% of global gross domestic product and a market of two billion people.
The pact is expected to significantly reduce tariffs and expand market access for both sides.
Von der Leyen and European Council President António Costa are in Delhi, where they met Modi at a bilateral summit.
The European Commission said the agreement would eliminate tariffs on most exports of chemicals, machinery and electrical equipment, as well as aircraft and spacecraft, following phased reductions. Significantly, duties on motor vehicles, currently as high as 110%, would be cut to 10% under a quota of 250,000 vehicles. That is six times larger than the 37,000-unit quota India granted to the UK in a deal signed last July, Bloomberg reported.
India’s deal with the EU is set to lower costs for European products entering the country – such as cars, machinery and agricultural food items, after import duties are reduced.
Brussels said the agreement would support investment flows, improve access to European markets and deepen supply-chain integration.
Delhi said almost all of its exports would get “preferential access” into the EU, with textiles, leather, marine products, handicrafts, gems and jewellery set to see a reduction or elimination of tariffs.
While commodities such as tea, coffee, spices and processed foods will benefit from the agreement, Delhi “has prudently safeguarded sensitive sectors, including dairy, cereals, poultry, soy meal, certain fruits and vegetables, balancing export growth with domestic priorities”, it said.
Delhi and Brussels have also agreed on a mobility framework that eases restrictions for professionals to travel between India and the EU in the short term.
“This is India’s biggest free trade agreement,” Modi said. “It will make access to European markets easier for India’s farmers and small business. It will also boost manufacturing and services sectors. It will boost innovative partnerships.”
