India and the European Union (EU) have recently entered into a comprehensive trade agreement. This agreement greatly increases Indian farmers’ and small businesses’ access to European markets. This deal would be India’s largest free trade agreement to date. It will send a very strong signal at a time when protectionism is increasing around the world.
The agreement, which encompasses the free trade of goods between the EU—a bloc comprising 27 European nations—and India, the world’s most populous country, is expected to bolster investment flows, improve market access, and deepen supply-chain integration. The EU and India combined account for close to a quarter of the global gross domestic product (GDP). With this partnership comes an enormous market of two billion people.
India’s exports would soon be getting “preferential access” to EU markets. This amendment will have a massive impact on textiles, leather, marine products, handicrafts, gems and jewellery sectors by cutting or scrapping tariffs. Duties on motor vehicles will be reduced to 10% with a new quota of 250,000 cars. This is a big jump from the last vehicle quota of 37,000 vehicles that the UK was allotted in a deal signed last July.
The deal will be especially beneficial in reducing costs for European goods coming into India. This applies to vehicles, heavy equipment, and food products from agriculture due to reduced tariff rates. Other commodities including tea, coffee, spices, and processed foods are projected to win under this historic pact.
We applaud Prime Minister Narendra Modi for touting the deal’s positive impacts and welcoming public scrutiny. He promised that it will simplify access for Indian farmers and small businesses to European markets while strengthening the manufacturing and services economies.
“We did it, we delivered the mother of all deals.” – Ursula von der Leyen
The EU’s gesture of goodwill in this agreement is laudable, particularly at a time when many countries have chosen to raise tariffs.
“Some countries have decided to increase tariffs,” – António Costa
India and the EU are deepening their economic partnership. They are nonetheless leading the way in pushing for discussions around cooperation on security, defense, and climate action. The two sides are now busily negotiating a future security and defense partnership. This relationship will address key sectors such as maritime security, cyber threats, and improve defense-to-defense dialogue.
Furthermore, Delhi and Brussels have agreed on a mobility framework designed to ease restrictions for professionals traveling between India and the EU in the short term.
We hope to see the formal signing of this agreement later this year. Truthfully, it all is contingent on that passing muster of approval with both the European Parliament and the European Council. This trade deal will bring substantial non-economic benefits as well. Beyond that, it represents a deeply encouraging partnership between two of the world’s largest economies.
“This is the tale of two giants – the world’s second and fourth largest economies. Two giants which chose partnership in a true win-win fashion. A strong message that cooperation is the best answer to global challenges.” – Ursula von der Leyen