Exports of goods from the European Union to India are expected to double by 2032

On January 27, after nearly two decades of negotiations, the European Union and India concluded negotiations on a historic and ambitious free trade agreement (FTA). This is stated in a press release from the European Commission.

The agreement will strengthen economic and political ties between the world’s second and fourth largest economies at a time of growing geopolitical tensions and global economic challenges.

The agreement is expected to double EU exports to India by 2032 by eliminating or reducing tariffs on 96.6% of European supplies to the Indian market, saving the bloc’s businesses €4 billion annually.

For example, tariffs on European cars will gradually decrease from 110% to 10% with a quota of 250,000 units per year, while tariffs on auto parts will be eliminated in 5-10 years. Tariffs of up to 44% on machinery, 22% on chemicals, and 11% on pharmaceuticals will also be largely eliminated.

It is also noted that the agreement abolishes or reduces often prohibitive tariffs (on average over 36%) on exports of agri-food products from the EU, opening up a huge market for European farmers.

The FTA contains a separate section dedicated to helping SMEs – entrepreneurs will be able to easily access all information about doing and starting a business in the EU and India.

At the same time, the European Union will abolish or reduce tariffs on 99.5% of goods imported from India over seven years, Bloomberg reports, citing the country’s Ministry of Commerce and Industry. The agreement will also give India a competitive advantage in the export of labor-intensive goods, which have been severely affected by Trump’s tariffs.

The agreement is expected to be formally signed after a legal review, which is likely to take about six months. It must also be ratified by the European Parliament.