By Admin 
India EU Free Trade Agreement: After nearly two decades of negotiations, the Free Trade Agreement (FTA) between India and the European Union has been finalized. Although it will take time for its full implementation and it is expected to become effective from next year, but the benefits of this deal are already in the news. Once the FTA is implemented, tariffs on about 97 percent of Indian products sent to Europe will be zero, which will lead to annual customs duty savings of about $4 billion in trade with the European Union. With this, many products coming to India from Europe will become much cheaper for Indian consumers.
The biggest impact of this agreement will be seen on food items. Currently, there is a 30 to 50 percent tariff on chocolate, cheese, pasta and other food products imported from Europe, which can be reduced to zero in a phased manner after the FTA. With this, these products will be available in the Indian market at much cheaper prices than before.
How cheap is it in India?
| products | Current Tariff Rates (in Percentage) | Future Tariff Rates (in Percentage) |
| aircraft and spacecraft | 11 | 0 |
| Machinery and Electrical Equipments | 44 | 0 |
| Glasses, medical and surgical items | 27.5 | 0 |
| chemicals | 22 | 0 |
| plastics | 16.5 | 0 |
| motor vehicles | 110 | Quota up to 10 (250K) |
| iron and steel | 22 | 0 |
| medicines | 11 | 0 |
| beer | 110 | 50 |
| Liquor | 150 |
20 (Premium Range) 30 (medium range) |
| Olive Oil and Vegetable Oil | 45 |
0 |
| Fruit Juice and Non-Alcoholic Beer | 55 |
0 |
| Processed fruits (breads, pastries, pasta and chocolates and pet foods) | 50 |
0 |
Big relief on beer and liquor
A big relief is also expected in the prices of liquor and wine. At present, there is a heavy import duty of 100 to 150 percent on European liquor and wine. After FTA, this tariff may come down to the range of 20 to 30 percent, while in some categories it may be further reduced. Consumers will directly benefit from this and premium wine can now become more affordable.
Big changes will also be seen in the automobile sector. Currently, 70 to 100 percent import duty is imposed on European cars in India, due to which luxury cars become very expensive. After the agreement, the tariff on expensive cars can be reduced to about 40 percent in the first phase and further reduction is possible in future. With this, European cars like BMW, Mercedes, Audi will become comparatively cheaper in the Indian market.
Impact on agriculture and dairy sector
Impact will also be seen in agriculture and dairy sectors. Due to reduction in import duty on olive oil, processed food and some dairy products coming from Europe, their prices may come down. At the same time, Indian farmers and agri-exporters will also get better access to the European market, which will boost agricultural exports.
Overall, after the implementation of India-EU FTA, many everyday imported items will be available to Indian consumers at cheaper rates, while the huge market of Europe will become more open for Indian industry and exporters. This is expected to provide relief in prices as well as strengthen investment, employment and trade.
Also read: What will be the next step for the ‘Mother of All Deal’ to become effective?