The European Commission on Tuesday sealed a free trade deal with India, cutting tariffs on EU goods while leaving out sensitive sectors to appease Indian authorities. European carmakers will benefit from the gradual tariff reductions under the deal, dubbed the “mother of all deals.”
After months of intense negotiations, the European Commission on Tuesday concluded a free trade agreement with India that significantly reduces tariffs on EU products, from cars to wine, as the world seeks alternative markets after President Donald Trump’s tariffs.
The announcement came during a high-level visit by European Union leaders, including Commission President Ursula von der Leyen. Both sides hailed a “new chapter in strategic relations” as they seek alternatives to the US market.
India currently faces 50% tariffs from the Trump administration, which has severely damaged its exports.
“We did it – we delivered the mother of all deals,” von der Leyen said after announcing the deal. “This is the story of two giants choosing partnership in a truly win-win way. A strong message that cooperation is the best response to global challenges,” she said.
Talks went down to the wire, with negotiators meeting over the weekend and into the early hours of Monday. The deal says it will boost the “untapped” potential of their combined markets, but it does not include some politically sensitive agricultural sectors.
Von der Leyen’s trade chief, Maroš Šefčovič, who is responsible for negotiations on behalf of the 27 EU member states, said Brussels is aiming for a swift implementation by 2027.
In an interview with Euronews from Delhi after the agreement was announced, he said the agreement with India shows the EU’s new approach to trade: more pragmatic in results, rather than getting stuck on political red lines.
“We restarted negotiations with a new philosophy, being very clear in saying: if this is sensitive for you, let’s not touch it,” he said, describing the strategy as a radical change.
Under the agreement, the EU aims to double its exports of goods to India by 2032, cutting tariffs on around 96% of EU exports to the country, saving around €4 billion a year in duties. At its full potential, the agreement creates a market of 2 billion people.
European carmakers stand to benefit, with Indian customs duties gradually reduced from 110% to 10% under a quota system. Tariffs on sectors such as machinery, chemicals and pharmaceuticals will be almost completely eliminated.
Wine and spirits – key exports to countries such as France, Italy and Spain – will see duties reduced from 150% to around 20–30%. Duties on olive oil will be reduced to zero from 40%.
After years of tensions with EU farmers, the Commission said sensitive agricultural products were excluded from the deal, leaving out beef, chicken, rice and sugar.
As for India, the agreement leaves trade conditions for dairy products and cereals unchanged, in line with the requests of the Indian authorities, which considered these to be red lines.
The Commission said it included a special chapter on sustainable development, “which strengthens environmental protection and addresses climate change.”
The agreement does not cover geographical indications, another contentious area for negotiators, which will be addressed in a separate agreement aimed at protecting EU products from imitation in the Indian market.
Deal reached under pressure from Trump tariffs
The timing of the deal is important, as both sides seek to reduce the risks to their economies from Trump’s tariff threat.
The EU saw tariffs triple to 15% last year under a controversial deal, while India currently operates under a 50% tariff regime from Washington.
The Trump administration last year imposed an additional 25% duty on India as punishment for buying Russian oil, which India has defended by citing the need for cheap energy to supply a country of 1.4 billion people.
Talks between the EU and India first began in 2007, but quickly ran into obstacles.
Negotiations were relaunched in 2022 and intensified last year, as both sides sought to mitigate the impact of Trump’s return to the White House.
The Commission hopes to start implementing the agreement from January 2027
