Overview of the India-EU trade deal
By Shivangi Acharya
Trade agreement details
Jan 26 (Reuters) – India and the European Union have concluded negotiations on a coveted trade deal to be announced on Tuesday, the South Asian country’s commerce secretary said on Monday.
Impact on global trade
The agreement paves the way for free trade in goods between the bloc of 27 European countries and India, which together represent a quarter of the world’s gross domestic product and a market of 2 billion consumers.
Context of the negotiation
“It will be a balanced and forward-looking agreement for better economic integration with the EU. The agreement will boost trade and investments between the two sides,” Indian Commerce Secretary Rajesh Agrawal said.
Trade between the two sides amounted to $136.5 billion for the fiscal year through March 2025.
QUICK COMMERCIAL AGREEMENTS
The formal signing would take place after a legal vetting that is expected to take five to six months, an Indian government official familiar with the matter said.
“We hope the agreement will be implemented within a year,” the official added.
The agreement comes days after the EU signed a crucial deal with South American bloc Mercosur, following last year’s deals with Indonesia, Mexico and Switzerland.
During the same period, New Delhi finalized agreements with Britain, New Zealand and Oman.
The flurry of deals underscores global efforts to protect against the United States, as President Donald Trump’s attempt to seize Greenland and tariff threats against European countries test long-standing alliances between Western countries.
After nearly two decades of on-and-off negotiations, the deal will see India open its vast and protected market, the world’s largest, to free trade with the EU, its largest trading partner.
EXPEDITED NEGOTIATIONS AGREED LAST YEAR
India and the EU pushed to seal the deal after Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed to accelerate negotiations last year.
Bilateral negotiations, restarted in 2022 after a nine-year lull, gained momentum after Trump imposed import tariffs on several trading partners, including a 50% duty on goods from India.
A trade deal between India and the United States collapsed last year after a breakdown in communication between the two governments.
The EU and India were engaged in last-minute concessions on auto and steel trade, one of the latest points of contention.
The EU had asked India to slash import duties on its cars, which can exceed 100%, while India – a major steel producer – has pushed the EU to reduce trade restrictions on its steel exports.
Reuters reported on Sunday that India plans to cut tariffs on cars imported from the EU from 110% to 40%, as part of the deal.
Negotiations have excluded some sensitive agricultural and dairy products as New Delhi maintains the need to protect millions of subsistence farmers.
(Reporting by Shivangi Acharya and Kanjyik Ghosh; editing by Clarence Fernandez, Alexandra Hudson and Emelia Sithole-Matarise)
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