This is what's in the India-EU trade deal — and who stands to gain

• The EU expects to double exports to India by 2032, saving around 4 billion euros annually in tariff reductions, with India offering tariff cuts no other trading partner has received
• India will reduce car tariffs from 110% to 10% and eliminate duties on car parts over 5-10 years, while nearly eliminating tariffs on European machinery (22%), chemicals, and pharmaceuticals (11%)
• The deal could create 6-7 million jobs in India's textile sector alone and provides zero-duty access for $33 billion worth of Indian labor-intensive exports currently strained by U.S. tariffs

India-EU Trade Deal Summary

Key Agreement Terms

India and the European Union have finalized a free trade agreement eliminating or reducing tariffs on over 90% of goods traded between the regions, creating a free trade zone covering 2 billion people. The deal is expected to take effect in 2026.

Major Tariff Changes

European exports to India:

• Automotive tariffs reduced from 110% to 10%
• Car parts duties eliminated after 5-10 years
• Machinery tariffs reduced from up to 44%
• Chemicals from 22%, pharmaceuticals from 11%
• Agricultural products (wine, olive oil) see reduced/eliminated tariffs

Indian exports to EU:

• Zero tariffs on textiles, apparel, marine products, leather, footwear, chemicals, plastics, gems, and jewelry (previously 4%-26%)
• These labor-intensive sectors represent $33 billion in exports

Economic Impact

The EU projects the deal will:

• Double EU exports to India by 2032
• Reduce India's tariffs on European products by €4 billion ($4.7 billion) annually
• Create 6-7 million jobs in India's textile sector alone

India's bilateral trade with the EU totaled $136.54 billion in FY2025 ($75.85 billion exports, $60.68 billion imports).

Market Reaction

Indian automotive stocks declined on the news: Maruti Suzuki (-1.5%), Hyundai Motor India (-3.6%), Mahindra & Mahindra (-1.3%), and Tata Motors (-4.2%). Beverage companies United Breweries and United Spirits fell over 2%.

Strategic Context

The deal provides India alternative export markets amid 50% U.S. tariffs and occurs as U.S.-EU trade relations face uncertainty. India is the EU's ninth-largest trading partner (2.4% of bloc's trade), while the EU rivals the U.S. and China as India's largest trading partner.