[Global IDT Insights] EU-India Free Trade Agreement – Tariff & Market Access Highlights

Global IDT Insights provides a weekly snippet of tax news specifically related to Indirect Taxes from around the globe.

1. EU-India Conclude Landmark Free Trade Agreement – Tariff Measures for Mutual Market Access

The European Union (EU) and India have concluded negotiations for a landmark free trade agreement (FTA), marking the most ambitious trade opening ever granted by India and the largest FTA for the EU. The agreement strengthens economic and political ties between the two economies and highlights their commitment to rules-based trade, economic openness, and sustainable development.

The guidance outlines tariff reductions, market access for goods and services, intellectual property (IP) protections, and sustainability commitments. It also details preferential treatment for EU businesses in India, protection of sensitive sectors, and mechanisms to support small and medium enterprises (SMEs) in both regions.

Key aspects of this agreement include:

(a) Tariff Reductions on Industrial and Agri-food Products – India will eliminate or reduce tariffs on 96.6% of EU goods exports, saving approximately €4 billion per year in duties. Tariffs on cars will gradually decrease from 110% to 10%, while tariffs on car parts will be fully abolished within five to ten years. Machinery, chemicals, and pharmaceuticals will also benefit from substantial tariff reductions.

For agri-food products, Indian tariffs on wines will be cut from 150% to 75% at entry into force and eventually to 20%. Olive oil tariffs will fall from 45% to zero over five years, and tariffs of up to 50% on processed agricultural products, such as bread and confectionery, will be removed.

All goods imported into India must continue to comply with the EU’s strict health and food safety regulations. This ensures that while India reduces tariffs, European exporters must meet EU standards when bringing products into India.

(b) Market Access and Services Provisions – EU companies will obtain privileged access to India’s services market, including financial services and maritime transport. The agreement includes India’s most ambitious commitments on financial services to date, exceeding commitments made to other trading partners.

Both EU and Indian SMEs will benefit from dedicated contact points to navigate the FTA’s provisions and gain access to information on tariffs, regulatory requirements, and procedural support.

(c) Intellectual Property Protection – The agreement ensures a high level of IP protection and enforcement, covering copyright, trademarks, designs, trade secrets, and plant variety rights. It aligns Indian and EU IP laws with existing international treaties, facilitating trade and investment for businesses reliant on IP assets.

(d) Sustainable Development and Environmental Commitments – A dedicated chapter addresses environmental protection, climate change, labour rights, and women’s empowerment. The EU and India will establish a platform for cooperation on climate action, with €500 million in EU support over the next two years to help India reduce greenhouse gas emissions and promote sustainable industrial transformation.

(e) Implementation and Next Steps – The negotiated draft texts will undergo legal revision, translation, and adoption processes in the EU. Following the European Parliament’s consent, Council approval, and India’s ratification, the agreement will enter into force. Separate negotiations on Geographical Indications and Investment Protection remain ongoing to complement the FTA framework.

Source – Official Source

Click Here To Read The Full Article