India, EU attain landmark commerce deal, tariffs to be slashed on most items | USAEMALL.com

Trade between India and the EU stood at US$136.5 billion in the fiscal year through March 2025, compared to US$132 billion of trade between India and US, and US$128 billion between India and China.

The formal signing of the India-EU deal would ‍take ‌place after legal vetting, expected to last five to six months, an Indian government official aware of the matter has said.

“We expect the deal to be implemented within a year,” the official added.

The vetting process in the EU region could be subject to some setbacks, as in the case with Mercosur. EU lawmakers have voted to challenge the EU-Mercosur agreement in the bloc’s top court.

OPENING UP GUARDED SECTORS

The EU accord with India would open up the South Asian nation’s vast and highly guarded market, with New Delhi slashing tariffs on cars to 10 per cent over five years from as high as 110 per cent, according to an EU statement, benefiting European automakers such as Volkswagen, Renault, Mercedes-Benz and ‌BMW.

The reduced tariffs on autos would be granted to 250,000 cars a year valued at over 15,000 euros and will be cut to 30 per cent-35 per cent as soon as the deal is implemented, both sides said.

India is also slashing tariffs on alcoholic beverages like wines to 75 per cent immediately from 150 per cent, which would be lowered to 20 per cent gradually. Tariffs on spirits will be lowered to 40 per cent, the EU said.

The deal will also cut tariffs on a slew of EU goods coming to India, including machinery, electrical equipment, chemicals and iron and steel, the EU said.

However, there was no immediate relief for Indian companies hit by the carbon tax under the EU’s Carbon Border Adjustment Mechanism (CBAM) that started on Jan 1.

Besides steel, the decarbonisation-oriented levy applies to cement, electricity, fertilisers and other products as well.

India said it has got a commitment from the EU that it will get flexibilities on the carbon tax if it is granted to any third country.

Separately, the EU agreed to provide financial support of 500 million euros ‌over the next two years to help India in cutting ‌greenhouse gas emissions.