India-EU trade deal to cut import duties on textiles, footwear, cars, wines and more: Report

Import duty cuts on labour-intensive sectors such as textiles and footwear, as well as cars and wines, are expected to be included in the free trade agreement (FTA) between India and the 27-nation bloc European Union (EU), which is set to be announced on 27 January, according to a PTI report citing people aware of the development.

They mentioned that the agreement is also likely to liberalise regulations across various service sectors.

India has advocated for zero-duty access in its labour-intensive sectors, including textiles, leather, apparel, gems and jewellery, and handicrafts. This has been an important demand in all of India's free trade agreements, and it has been met successfully in each case, including those with the UK, the UAE, and Australia, the report said.

Meanwhile, the EU has been pressing for lower tariffs on its cars and alcoholic beverages, such as wines. India has offered quota-based tariff reductions for automobiles in its trade agreement with the UK. Additionally, wines are included in trade agreements with Australia and New Zealand.

India has granted duty concessions on Australian wines over a period of 10 years.

In September last year, Commerce Secretary Rajesh Agarwal, then a special secretary, said that the proposed trade agreement with the EU would open significant opportunities for the domestic auto sector to increase exports and establish new collaborations with major automobile companies from the 27-member bloc, the report said.

India-UK trade agreement

In the India-UK trade agreement, signed in May 2025, tariffs on automotive imports were proposed to be cut from more than 100% to 10% under quotas for both countries.

India included enough safeguards in the FTA with the UK to protect its sensitive sectors. In the automotive segment, import duties will be cut over a 10-15-year period.

India-EU FTA details

On 27 January, India and the European Union are expected to announce the conclusion of negotiations and the finalisation of the free trade agreement. The pact will be finalised after 18 years of negotiations, which began in 2007, the report said.

The tariffs imposed on Indian goods by the EU are around 3.8%; however, labour-intensive sectors attract about 10% import duty. India's weighted-average duty on EU goods is around 9.3%, with high duties on automobiles (35.5%), parts (35.5%), plastics (10.4%), and chemicals and pharmaceuticals (9.9%).

India levies a duty of 100-125% on alcoholic beverages.

Notably, sensitive agricultural issues have not been part of the deal. While the EU has been protective about its beef, sugar and rice markets, India has safeguarded its farm and dairy sectors, as the livelihoods of large numbers of small and marginal farmers depend on them.

An FTA involves two parties lowering or removing import tariffs on more than 90% of the goods traded between them.

A trade deal also involves easing regulations to promote trade in service sectors such as telecommunications, transportation, accounting, and auditing.

In addition to the FTA, the two sides are also negotiating an agreement on investment protection and Geographical Indications (GI). The India-EU FTA consists of 24 chapters, covering trade in goods and services.

India's bilateral trade in goods with the EU was $136.53 billion in 2024-25, comprising $75.85 billion in exports and $60.68 billion in imports, making the EU India's largest goods trading partner. The services trade in 2024 was $83.10 billion. India had a trade surplus of $15.17 billion in 2024-25.

The EU market accounts for about 17% of India's total exports, while India's exports to the bloc account for 9% of its overall overseas shipments.

(With inputs from PTI)