India-Europe Trade Deal: Check Products Set to Become Cheaper

Prime Minister Narendra Modi on Tuesday, January 27, unveiled what he described as a historic trade agreement between India and the European Union (EU). Terming it the “mother of all deals,” the Prime Minister said the long-awaited Free Trade Agreement (FTA) was concluded after nearly 20 years of on-and-off negotiations, at a time when the global economy is under strain due to tariff measures introduced by US President Donald Trump.

The landmark pact will see India gradually open up its vast and tightly regulated market to free trade with the 27-member EU, its largest trading partner. India–EU merchandise trade crossed $136 billion in FY25. 

Tariff reductions under the agreement are expected to lower input costs, improve value-chain integration, and boost overall trade volumes, classic FTA gains that benefit both producers and consumers.

Major Tariff Cuts Announced

Under the sweeping trade deal, India will cut or completely remove tariffs on nearly 97% of EU exports, saving European businesses up to €4 billion ($4.75 billion) annually in duties, the EU said.

Tariffs on automobiles will be reduced in phases from a peak rate of 110% to as low as 10%. Duties on wines will also be slashed gradually, falling from 150% to about 20%, according to AFP.

In addition, tariffs on processed food items such as pasta and chocolate, currently levied at 50%, will be fully eliminated.

Products Set to Become Cheaper

As a result of the agreement, a wide range of European imports will enter India at zero or sharply reduced tariffs. These include machinery and electrical equipment, aircraft and spacecraft, optical, medical and surgical instruments, plastics, chemicals, pharmaceuticals, motor vehicles, iron and steel, and around 22% of precious stones and metals.

Also Read: India-EU Sign 'Mother of All Deals': PM Modi Calls it Landmark Trade Pact 

Tariffs on cars will be brought down from 110% to 10%, while duties on wines will fall from 150% to 20%. Processed foods such as pasta, bread, biscuits, and chocolate will see tariffs eliminated entirely.

In addition, import duties on olive oil, margarine, and other vegetable oils, currently at 45%, will be scrapped. Fruit juices and non-alcoholic beer will also become duty-free under the deal.

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