Historic pact slashes import duties on cars and wine
Bhubaneswar: India and the European Union have officially made history. On Tuesday, January 27, 2026, the two economic giants concluded a landmark Free Trade Agreement (FTA) at Hyderabad House. This massive pact creates a free trade zone covering nearly 2 billion people and represents the most extensive tariff liberalization New Delhi has ever granted to a trading partner.
Commerce Minister Piyush Goyal signed the deal alongside his EU counterpart, marking a significant shift in global trade dynamics. European Commission President Ursula von der Leyen hailed the moment, stating that the deal deepens the partnership between the world’s largest democracies.
Cheaper Cars and Wine for Indians
For Indian consumers, the India EU Trade Deal promises significantly lower prices on premium European goods. The agreement outlines a dramatic reduction in import duties. Tariffs on European cars will drop gradually from the current 110% to as low as 10%, while duties on car parts will be eliminated entirely within five to ten years.
Food and beverage connoisseurs also have reasons to cheer. Duties on wine will fall from 150% to 75% immediately upon implementation, eventually sliding to 20%. Olive oil tariffs will phase down to zero over five years, and duties on items like chocolates and bread will also vanish.
Massive Boost for Indian Exports
While India opens its doors to European machinery and autos, domestic industries are set to gain massive market access. Analysts estimate that this bilateral agreement could lift India's exports to the EU by roughly $50 billion.
The deal is a potential game-changer for the textile, pharmaceutical, and chemical sectors. This optimism was immediately reflected in the stock market, where shares of textile majors like KPR Mill and Welspun Living rallied significantly. With the removal of trade barriers, Indian manufacturers can now compete more aggressively in European markets.
Service Sector and Sustainability
Beyond goods, the pact offers Indian firms enhanced access to EU service markets, particularly in maritime transport and financial services. It also includes a dedicated chapter on sustainability. The EU has pledged up to €500 million in support over the next two years to help India transition toward green technologies and reduce greenhouse gas emissions.
What Comes Next?
Implementation will require a few procedural steps. The draft texts will undergo legal review and translation before being submitted to the European Council and Parliament for approval. Once ratified by both sides, the agreement will enter into force.
This deal comes at a crucial time, helping India navigate global economic uncertainty while securing supply chains with trusted partners.
With Agency Inputs and Image Source: ANI
