Regarding the free trade agreement between India and the European Union (EU), Indian Prime Minister Narendra Modi stated, “People around the world are calling this the mother of all deals.” Modi, EU Commission President Ursula von der Leyen, and EU Council President Antonio Costa signed it on Tuesday. By 2032, tariffs will be drastically reduced on both sides, with the EU lowering taxes on Indian imports by 99.5% of items and India lowering tariffs on goods by 96.6%. The reduction in tariffs is anticipated to save the EU 4 billion euros.
A larger free market zone than the EU-Mercosur (four South American states of Argentina, Brazil, Paraguay, and Uruguay) will be created by the India-EU Free Trade Agreement. The EU-Mercosur contract covers a population of 8 billion people, whereas the India-EU accord will cover a population of roughly 1.9 billion, double that of EU-Mercosur. As American President Donald Trump unleashes punitive tariffs on its trading partners worldwide, new free market zones are forming that do not include the United States.
It will take five to six months for the India-EU agreement to take effect as it undergoes legal review on both sides. In the meantime, the EU-Mercosur Free Trade Agreement has encountered a roadblock as some EU lawmakers have chosen to contest some terms of the agreement before the EU’s highest court, the Court of Justice for the European Union.
The agreement will make it easier for European automobiles to enter the Indian market by lowering tariffs from the current 110% to 10% over a ten-year period. The reduced tariffs would be available for 250,000 cars which cost over 15,000 euros, and will then go down to 30 to 35 per cent.
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