Delhi summit likely to seal historic pact lowering import duties
After nearly two decades of stop-start negotiations, one of the most significant economic milestones for the country is finally within reach. Leaders from New Delhi and Brussels are poised to announce the conclusion of the long-awaited India-EU Free Trade Agreement during the summit scheduled for January 27.
European officials describe this pact as the "mother of all deals," signaling a massive shift in how India engages with its largest trading partner for goods. Unlike previous attempts that stalled over labor standards and market access, strong political will from both sides has pushed this agreement to the finish line. Both regions are keen to secure reliable supply chains and reduce economic dependence on China.
Cheaper Cars and Consumer Goods
For the average consumer, the most visible impact will be on the automobile sector. Currently, imported cars face steep tariffs ranging from 70% to 110%. Under the proposed India-EU Free Trade Agreement, duties on European cars priced above 15,000 euros could drop to 40% immediately, eventually sliding to 10%. This opens the door for brands like Volkswagen and Mercedes-Benz to compete more aggressively. Similarly, European wines and spirits may see significant duty reductions.
Boost for Indian Industry
This deal is not just about imports; it is a vital lifeline for Indian manufacturers. Sectors like textiles, garments, leather, and engineering goods—industries that are crucial for states like Odisha—stand to gain immense benefits. Since the EU withdrew specific tariff concessions in 2023, Indian exporters have faced stiff competition. This pact aims to restore that competitive edge by eliminating duties on labor-intensive goods.
Furthermore, India is pushing hard for easier movement of skilled professionals and service providers, which would be a major win for the IT and services sector.
Remaining Hurdles
Despite the optimism, negotiators are still ironing out the final wrinkles. India remains firm on protecting its dairy and agriculture sectors. A significant concern is the EU's "Carbon Border Adjustment Mechanism" (CBAM), effectively a carbon tax on steel and aluminum exports, which could impact heavy industries significantly from 2026.
While the announcement is expected this week, the deal will still require ratification by the European Parliament, meaning the full benefits may take another year to materialise.
With Agency Inputs
