India-EU FTA: Car, Wine, Alcohol Tariffs to Drop

The European Union expects the deal to double EU goods exports to India by 2032 by eliminating or reducing tariffs in value of 96.6 per cent of EU goods exports to India, the deal document by the European Union said.

The tariffs on cars will come down from 110 per cent to as low as 10 per cent and there will be a quota for 2,50,000 units per year. The tariffs on car parts will be fully abolished for car parts after five to ten years. This would significantly lower the price of European luxury cars like BMW, Mercedes-Benz, and Volkswagen.

Tariffs ranging up to 44 per cent on machinery, 22 per cent on chemicals and 11 per cent on pharmaceuticals will also be mostly eliminated.

Tariffs of over 36 per cent on average on EU exports of agri-food products, opening a massive market to European farmers. Indian tariffs on wines will be cut from 150 per cent to 75 per cent at entry into force and eventually to levels as low as 20 per cent, tariffs on olive oil, margarine, vegetable oils, fruit juices, non-alcoholic beer, and sheep meat will be eliminated, while processed agricultural products such as bread and confectionary will see tariffs of up to 50 per cent eliminated. Tariffs on beer will come down from 110 per cent to 50 per cent, spirits 150 per cent to 40 per cent, kiwis and pears 33 per cent to 10 per cent with quota, and sausages and meat preparations from 110 per cent to 50 per cent.

Pearls, precious stones and metal tariffs will come down from 22.5 per cent to 0 per cent for 20 per cent of products in five years. For 90 per cent of optical, medical and surgical equipment, tariffs will be eliminated in 10 years. In 10 years, aircraft and spacecraft tariffs of 11 per cent will become 0 per cent. Pharmaceutical tariffs of 11 per cent will be eliminated in five-seven years.

On the environmental regulations like CBAM, the EU document said that “the agreement enhances environmental protection and addresses climate change, protects workers' rights, supports women's empowerment, provides for a platform for dialogue and cooperation on trade related environmental and climate issues and ensures effective implementation.”

Further, both economies will put in place dedicated contact points to provide SMEs with relevant information on the FTA and help them with any specific issue they would face when trying to use the FTA's provisions. In addition to this, SMEs will particularly benefit from the tariff reductions, removal of regulatory barriers, transparency, stability and predictability provided by the Agreement.

Sensitive European agricultural sectors will be fully protected, as products such as beef, chicken meat, rice and sugar are excluded from liberalisation in the agreement. All Indian imports will continue to have to respect the EU's strict health and food safety rules.

The agreement will grant EU companies privileged access to the Indian services market, including key sectors such as financial services and maritime transport. It has the most ambitious commitments on financial services by India in any trade agreement, going beyond what they have given to other partners.

The agreement provides a high level of protection and enforcement of Intellectual Property (IP) rights, including copyright, trademarks, designs, trade secrets and plant variety rights.