NEW DELHI,27 Jan 2026 : The sealing of the Free Trade Agreement between India and the European Union after an 18-year wait will bring joy to many, connoisseurs of wine and whiskey and automobile enthusiasts, among them.
The trade pact will open up the European markets for Indian goods. At the same time, it will make imported European items cheaper in India by reducing duties.
European cars such as Mercedes, BMW and Audi currently attract an import duty of over 100 per cent. According to the agreement, cars costing more than 15,000 euros — around Rs 16 lakh — will now attract a duty of 40 per cent. This duty will be further reduced to 10 per cent, slashing prices of these cars by lakhs.
The two sides have agreed on “quota” based duty concessions, an official from the Commerce Ministry said. This has been done to protect the Indian auto industry, which is growing at a fast pace.
India and the European Union (EU) has announced a historic, mega free-trade agreement (FTA) that ushers in 10 key achievements as under:
The FTA is expected to bring a qualitative change in deepening the overall bilateral ties in a range of sectors. The broad focus of today’s meeting was on trade, defence and security, climate change, critical technologies and strengthening the rules-based global order.
The two sides also unveiled a defence framework pact and a strategic agenda. The new partnership comes at a time when Europe is seeking to reduce its dependence on the US and China, and deepen its diplomatic and economic ties to other regions.
India and the European Union have been strategic partners since 2004. The proposed Security and Defence Partnership (SDP) will facilitate deeper defence and security cooperation between the two sides. The SDP will bring interoperability in the defence domain and will open up avenues for Indian firms to participate in the EU’s SAFE (Security Action for Europe) programme.
SAFE is the EU’s 150 billion euro financial instrument designed to provide financial support to member states to speed up defence readiness.
The EU and India had first launched negotiations for the free-trade agreement in 2007, before the talks were suspended in 2013 due to a gap in ambition. The negotiations were relaunched in June 2022.
Pictures credit social media
