Details of EU-India trade deal
NEW DELHI: India and the European Union have concluded negotiations on a long-awaited free trade agreement as both sides seek to cushion the impact of strained ties with the United States.
The pact paves the way for freer trade in goods and services between the 27-nation EU and India, together representing a market of roughly 2 billion people.
Key details of the deal include:
BENEFITS FOR EU EXPORTERS:
– Indian tariffs on 30% of goods traded with EU to fall to zero immediately
Tariffs will be eliminated or reduced on over 90% of EU exports
– EU firms to save up to 4 billion euros ($4.74 billion) a year in duties
– Improved access for EU firms in financial and maritime services
– Simplified customs rules and stronger intellectual property protection
– India’s duties on vehicles imported from EU to fall from 110% to 10% over five years, under a 250,000-vehicle annual quota, likely benefiting Volkswagen, BMW, Mercedes-Benz and Renault.
– India completely scraps tariffs on most industrial imports from EU, including machinery and electrical equipment (currently at 44%), chemicals (up to 22%) and pharmaceuticals (11%).
BENEFITS FOR INDIAN EXPORTERS:
– At launch of deal, the EU will scrap all tariffs on 90% of Indian goods
– Zero tariffs to be extended to 93% of Indian goods within seven years
– Partial cuts and quotas for about 6% of Indian goods
– 99.5% of bilateral trade receives some form of tariff concession
– India to keep autos and agriculture out of full tariff elimination
– EU’s average tariff rate falls from 3.8% to 0.1%
– Tariffs cut to zero on key Indian exports to the EU, including marine products (currently at up to 26%), chemicals (12.8%), plastics/rubber (6.5%), leather/footwear (17%), textiles (12%), apparel (4%), base metals (10%), and gems and jewellery (4%), among a few others.
CARS: QUOTAS AND EXCLUSIONS
– EU cars priced below 15,000 euros ($17,800) excluded from the deal.
– Cars above that threshold split into three segments each with quotas and separate tariffs. Tariffs on most cars cut to 30–35% at launch of deal, then phased down to 10%. Indian officials said this would be over five years while an EU official said it would be over 10.
Electric vehicle tariff cuts begin from year five
– Final quotas will be 160,000 internal combustion engines and 90,000 electric vehicles from the EU.
– No duty cuts outside quotas and no tariff reduction on Completely Knocked Down (CKD) kits
STEEL AND CARBON RULES
– India seeking improved access to tariff-free EU steel import quotas as an FTA partner, with the outcome due by June 30, ahead of EU rules taking effect on July 1. An EU official says India will get 1.6 million metric tons duty-free, although this is about half of what India has been exporting to the EU annually, with the bloc seeking to halve tariff-free steel imports overall.
– No India-specific exemption from the EU’s carbon duties, though India says it can negotiate if EU grants flexibility to any other nation.
– A technical group will help Indian firms verify carbon footprints, alongside a separate agreement to ensure EU technical and financial support to help emission cuts in India
AGRICULTURE: ACCESS WITH SAFEGUARDS
– Indian tariffs on EU agri-food exports that attracted average duties of over 36%, cut or removed
– Sharp cuts on tariffs on EU wines, spirits, beer, olive oil, processed foods and some fruits
– Indian duties on premium wine will gradually fall from 150% to between 20% and 30%, with the rate in year one at 75%. For spirits, the rate will drop from as much as 150% to 40% over seven years, and over 10 years for gin.
– Beef, rice, sugar, dairy and poultry excluded; EU food safety rules unchanged and safeguard clause to limit imports in case of market disruption.
SERVICES, SUSTAINABILITY, DIGITAL TRADE
– The EU gives India access to 144 services sub-sectors, India opens 102 sub-sectors to the EU, including financial, maritime and telecoms
– Binding rules set on labour rights, environment, women’s empowerment and climate cooperation
– Digital trade rules to support business while protecting privacy, security and public policy
RULES AND NEXT STEPS
– Rules of origin prevent third-country goods routing through India for tariff benefits
– Disputes handled by independent panels with binding rulings
– Draft texts to be published, followed by legal review, translation and approval by EU governments, the European Parliament and India, expected possibly within a year.
($1 = 0.8424 euros)
Source: Reuters