Key Highlights

•  India‑EU finalize landmark trade deal cutting tariffs on 97% of EU exports.
•  Indian car import duties to plummet from 110% to 10% over five years.
• Wines, spirits to see steep tariff drops — as low as 20–40%.
• EU businesses to save €4 billion annually and double exports to India by 2032.

India and the European Union have sealed a deal years in the making — cutting tariffs on nearly 97% of EU exports and sharply reducing the duty on imported cars from 110% to 10% over five years. This landmark India‑EU trade agreement matters because it opens India’s €136 billion market wider than ever before and redefines the competitive landscape for automakers and luxury goods exporters.

Why the Deal Matters Now

The pact comes as both sides try to reduce dependence on unpredictable trade partners. It should double EU exports to India by 2032 and save European companies about €4 billion each year. For India, lower duties mean cheaper imports, new export jobs, and broader consumer choices.

India’s Auto Sector Feels the Impact

Right after the announcement, Indian carmakers saw sharp losses. Mahindra & Mahindra fell 4%, dragging the Nifty Auto index down 2%. Investors expect stronger competition from BMW, Mercedes‑Benz, Volkswagen, and Renault. These brands will now face much lower costs when selling in India.

As tariffs drop, European cars could enter the market at competitive prices. This will push Indian automakers to innovate faster while giving buyers more options in premium segments.

Imports Beyond Automobiles

Tariffs on wines will be cut immediately from 150% to 75%, then reduced to 20% over time. Spirits will fall to 40%. Luxury beverages could become far more affordable within a few years.

The EU will eliminate duties on 99.5% of Indian exports, including textiles, leather goods, gems, and chemicals. These cuts should boost India’s labour‑intensive manufacturing sectors. They may also offset losses from recent U.S. tariff increases.

A Bigger Trade Picture

Prime Minister Narendra Modi called it the “mother of all deals.” Analysts view it as part of India’s wider push to expand trade ties. Similar agreements with Britain, New Zealand, and Oman have recently been concluded.

By slashing auto and luxury goods tariffs, the India‑EU trade deal will reshape supply chains, deepen market integration, and set a precedent for future trade pacts.