India-EU FTA: Key things you should know — from tariffs to benefits for Indian exporters

Prime Minister Narendra Modi and European Commission President Ursula von der Leyen announced the conclusion of the India–European Union Free Trade Agreement (India–EU FTA) at the 16th India–EU Summit on Tuesday, 27 January.

The India-EU FTA, described as the “mother of all deals” by both leaders, is the largest-ever deal concluded by both sides. “It (FTA) will strengthen economic and political ties between the world's second and fourth largest economies, at a time of rising geopolitical tensions and global economic challenges, highlighting their joint commitment to economic openness and rules-based trade,” the official statement read.

With the announcement of the significant India-EU FTA, here are five key facts to know –

EU exports to India will double

The announced FTA is expected to double EU exports to India in six years by cutting tariffs on 96.6% of traded goods by value, and will save 4 billion euros ($4.75 billion) in duties for European companies, the EU said.

Which Indian goods will benefit?

The FTA is expected to significantly benefit the Indian agricultural and processed food sector. Preferential Market Access for products such as tea, coffee, spices, grapes, gherkins, cucumbers, dried onions, and fresh vegetables and fruits, as well as processed foods, will enhance their competitiveness in the EU, according to the Ministry of Commerce.

Which EU goods are getting import duty reduction?

India will immediately cut tariffs on alcoholic beverages, such as wine, from 150% to 75%, with the rate gradually lowered to 20%. Tariffs on spirits will be lowered to 40%, the EU said. The deal will also cut tariffs on a slew of EU goods entering India, including machinery, electrical equipment, chemicals, and iron and steel, the EU said.

What items have been kept out of the deal?

Agricultural goods such as soya, beef, sugar, rice, and dairy have been excluded from the trade deal.

What benefits will Indian exporters get?

After the launch of the deal, the EU will eliminate all tariffs on 90% of Indian goods. Within seven years, zero tariffs will be extended to 93% of Indian products, while approximately 6% goods will face partial cuts and quotas, Reuters reported. Overall, 99.5% of bilateral trade will benefit from some tariff concessions.

When will the deal come into force?

The India-EU FTA has not been officially signed so far. However, on Tuesday, 27 January, India and the EU announced that they have finalised their free trade agreement negotiations. The agreement is anticipated to come into effect in this calendar year, PTI reported, citing Union Minister Piyush Goyal.

"Every agreement stands on its own legs, and this is a wonderful agreement. It'll be taken up for a legal scrubbing on a fast track basis...We do hope that we should be able to celebrate the entry into force of this agreement within calendar 2026 itself," Goyal was quoted as saying.

What are next steps for the deal to become effective?

As per the EU statement, the following steps will be taken for the deal to come into force —

• Publish negotiated draft texts
• Legal revision and translation into all official EU languages
• Propose the agreement to the Council for signature and conclusion
• Adoption by the Council
• Signing of the agreement between the EU and India
• European Parliament's agreement to the deal
• The Council's decision on concluding the deal.
• After India ratifies the agreement, the deal can come into force.