India-EU FTA opens sensitive markets to EU cars, wine and farm imports

The European Commission has proposed that the European Union approve and conclude its free-trade agreement with India, bringing the long-awaited pact closer to taking effect.Once approved, the agreement would be the largest trade deal ever concluded by either the EU or India, the European Commission said Friday.The pact would remove or reduce tariffs on 96% of EU goods exports to India, saving European exporters about €4 billion a year in customs duties. It is also designed to expand market access, reduce trade barriers and provide businesses with more predictable regulatory rules.The official text and annexes show that India has opened parts of several politically sensitive markets through tariff-rate quotas and price-based concessions. The commitments cover automobiles, wine and selected alcoholic products, pork, apples, kiwifruit, pears and peaches. Imports meeting specified origin, price and quantity conditions will qualify for lower duties, while most imports outside those limits will continue to face the normal tariff.Cars get biggest tariff openingUnder the agreement, India will cut tariffs on eligible EU cars through a tariff-rate quota, with the first-year quota set at 1,00,000 completely built-up internal-combustion and non-plug-in hybrid cars. That is nearly six times the 17,191 cars India imported from the EU in 2025. The quota will rise to 1,60,000 cars by the 10th year.The concessions will apply only to cars priced at €15,000 or more. For cars priced between €15,000 and €35,000, the in-quota tariff will fall from the current 110% to 35% in the first year and 10% by the fifth year. For cars priced above €35,000, the duty will fall from 66% to 30% in the first year and 10% over the same period.Cars priced below €15,000 will receive no concession. The quota will also be divided among price bands, with 43,000 units reserved for cars priced above €50,000 from the fifth year onwards.India will also gradually reduce tariffs on eligible EU cars imported outside the quota. For cars priced between €15,000 and €50,000, the out-of-quota duty will fall to 35% by the 10th year, depending on the current tariff. For cars priced above €50,000, it will fall to 30%.The agreement also provides a separate quota for completely knocked-down internal-combustion and hybrid cars. The quota will be 75,000 units a year for the first five years before gradually falling to 50,000 units from the 10th year. The in-quota tariff will fall from 13.75% in the first year to 8.25% from the third year, compared with the current 16.5%.Concessions for battery-electric vehicles, plug-in hybrids and other eligible technologies begin in the fifth year and apply only to vehicles priced at €20,000 or more. The in-quota duty on completely built-up vehicles will fall from 30% in the fifth year to 10% in the 10th year, while the quota rises from 20,000 cars to 50,000 and eventually 90,000 from the 14th year.The EU is the second major trade partner after the UK to secure automotive tariff concessions from India under a free-trade agreement.Premium wine gets tariff cutIndia has also offered significant tariff concessions on EU wines. Wines valued below €2.50 will continue to face the 150% base customs duty. For wines priced between €2.50 and €10, the duty will fall to 75% in the first year and gradually decline to 30% from the eighth year.For EU wines valued at €10 or more, the duty will fall from 150% to 75% in the first year and progressively to 20% from the eighth year.The concessions cover sparkling wine, wine in containers and in bulk, grape wine, vermouth and other products classified under the relevant wine tariff categories.India has also offered concessions on certain fermented beverages and high-strength alcoholic products other than finished whisky. Products valued below $5 will receive no concession, while those valued at $5 or more will see the duty fall to 100% in the first year and then by five percentage points annually to 50% from the 11th year.The provisions primarily cover products such as cider, perry, mead, sake and wine coolers, as well as certain high-strength alcohol products used as inputs in producing spirits and other alcoholic drinks. Finished whisky, generally classified separately under the relevant tariff heading, is not directly covered by these provisions.Farm imports get limited accessThe agreement also opens limited quotas for several European farm products. India will allow 2,000 tonnes of EU pork a year at concessional tariffs, with the in-quota duty gradually falling from 31.82% in the first year to 20% from the 11th year. Imports beyond the quota will receive no tariff concession.For apples, India will provide a growing quota for EU fruit with a CIF price of at least ₹80 a kg. The quota starts at 50,000 tonnes in the first year and rises by 5,000 tonnes annually to 1,00,000 tonnes from the 11th year. Imports within the quota will face a 20% duty, while apples priced below ₹80 a kg will continue to face a 50% duty.The EU will also receive a 12,000-tonne first-year quota for kiwifruit, rising to 15,000 tonnes from the 11th year. The in-quota tariff will fall from 16.5% to 10% from the sixth year.India will provide a fixed annual quota of 2,250 tonnes for EU pears, with the in-quota duty falling gradually to 10% from the sixth year. The peach concession is much smaller, with an annual quota of just 20 tonnes and an in-quota duty of 26.4%. Imports beyond the quotas will receive no preferential tariff treatment.The EU and India began negotiating the agreement in 2007, but talks were suspended in 2013. Negotiations resumed in 2022 and were concluded in January 2026.The agreement could take effect by the end of this year or in the first half of 2027. Under the EU’s ratification process, the European Commission’s proposal must first be authorised by the Council of the EU and then receive the European Parliament’s consent. India is also advancing its own domestic approval process.The proposal comes as the EU seeks to speed up trade agreements amid rising geopolitical tensions and growing pressure on global commerce.Trade in goods and services between the EU and India now exceeds €180 billion a year, supporting nearly 800,000 jobs in the bloc, according to the European Commission.India is the EU’s ninth-largest trading partner for goods. Two-way merchandise trade reached €118 billion in 2025, with machinery, transport equipment and chemicals accounting for much of the EU’s exports to India. India’s main exports to the EU include machinery, chemicals, textiles, metals and refined petroleum products.Trade in services totalled €67 billion in 2025. EU imports of services from India stood at €37.8 billion, while exports to India were €29.2 billion.Investment ties are also significant. EU foreign direct investment stock in India stood at €132.8 billion in 2024, compared with €13.7 billion of Indian FDI stock in the EU.The EU and India are also negotiating separate agreements covering geographical indications and investment protection.India currently receives tariff benefits on some exports under the EU’s Generalised Scheme of Preferences. However, as Indian industries have become more competitive, several sectors have graduated from the scheme, leaving about 38% of India’s exports to the EU eligible for preferential tariffs.

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