Historic EU-India trade deal to slash auto tariffs, double bloc’s India exports by 2032

After nearly two decades of efforts, the European Union and India have formally concluded negotiations in New Delhi for a free-trade deal, shoring up the 27-member bloc’s ambitions to diversify trade ties while navigating tariff pressure from Washington and a ballooning deficit with Beijing.

The agreement, announced on Tuesday and praised by European Commission president Ursula von der Leyen as “the mother of all trade deals”, is poised to reduce or eliminate tariffs on 96.6 per cent of the EU’s exports to India, by value.

Pending ratification, the deal could still take months to be finalised and implemented.

It is expected to double the bloc’s goods exports – valued at €48.8 billion (US$58.5 billion) in 2024 – to the world’s most populous country by 2032, according to a statement from the European Commission.

European automotives, many of which have struggled to grow and profit in China, need a new market, and India could be it. Previously, selling cars there was more difficult due to a 110 per cent import tax. This new trade deal would drop that tax to 10 per cent, with an import quota of 250,000 vehicles per year.

The EU’s top three exports to India – machinery, aircraft and medical equipment – would largely see their tariffs cut to zero, the commission added.

South China Morning Post