India-EU Free Trade Agreement (FTA) Announcement

India and the European Union (EU) announced the conclusion of a Free Trade Agreement (FTA). This historic agreement will see the EU eliminate tariffs on 99.5% of items India exports to the region, with most tariffs dropping to 0% immediately upon implementation. India reciprocates with tariff concessions on 97.5% of the traded value.

Significance of the Agreement

• The FTA concludes negotiations that began in 2007, marking the largest trade agreement in India's history.
• It opens the European market to Indian farmers, small industries, and manufacturing sectors, while strengthening cooperation in services.
• Both sides excluded sensitive sectors to protect national interests.

Details of Tariff Reductions

• India's Exports:
  • 90.7% of India's exports will see immediate duty elimination, aiding labour-intensive sectors like textiles, leather, footwear, tea, coffee, spices, sports goods, toys, gems, jewellery, and marine products.
  • 2.9% of exports will have duty elimination over 3-5 years, including certain marine products and processed foods.
  • 6% of exports will have reduced tariffs on items such as poultry products and preserved vegetables.
• EU's Exports:
  • India will eliminate duties on 92.1% of tariff lines covering 97.5% of EU exports.
  • Immediate duty elimination on 49.6% of tariff lines, with phased reductions on an additional 39.5% over 5, 7, and 10 years.

Sector-Specific Details

• India's Gains:
  • Enhanced competitiveness in the EU market for sectors like marine products, chemicals, plastics, leather footwear, textiles, apparel, base metals, and toys.
• EU's Gains:
  • Duty-free access to Indian markets for machinery, electrical equipment, aircraft, spacecraft, optical, medical and surgical equipment, plastics, precious stones, metals, chemicals, motor vehicles, iron, steel, pharmaceuticals, and agricultural products.

Services Sector

• The EU agreed to commitments across 144 services subsectors, including IT/ITeS, professional services, and education.
• India agreed to open 102 subsectors covering EU priorities like telecommunications, maritime, financial, and environmental services.

Automobiles and Wine Negotiations

• India agreed to lower duties on European cars priced above Rs 25 lakh, with a quota-based system linked to price levels.
• For wine, duties will reduce from 150% to 20-30% based on price, also subject to quotas.