Pasta, Chocolates, Olive Oil, Cars: What Will Get Cheaper After The India–EU Free Trade Agreement?

Prime Minister Narendra Modi on Tuesday announced the signing of the India–European Union Free Trade Agreement (FTA), describing it as the “mother of all deals”. The pact covers economies accounting for nearly 25 per cent of global GDP and about one-third of world trade, and is expected to significantly lower tariffs across multiple sectors, making several products cheaper for consumers and boosting trade flows.

Here’s a look at what is expected to become more affordable:

1. Luxury Cars

India currently imposes import duties ranging from 70 per cent to 110 per cent on fully built imported cars. Under the proposed FTA, tariffs on cars imported from the EU are likely to be reduced to around 40 per cent, according to sources.

This move is expected to make European luxury car brands more affordable in India and encourage greater competition, technology transfer, and strategic partnerships. Automakers such as Volkswagen, Renault, Stellantis, BMW, and Mercedes-Benz -- many of which already manufacture locally -- could benefit from the lower duties by expanding their range of imported models.

The tariff cuts may also help grow India’s luxury car segment, which currently makes up just about 1 per cent of the passenger vehicle market.

2. Clothes, Textiles and Leather Goods

Textiles, apparel, and leather products are expected to be among the biggest gainers. Import duties in the EU, currently around 10 per cent, are likely to be reduced or eliminated.

This could help Indian exporters regain competitiveness after the loss of earlier trade concessions and generate employment in these labour-intensive sectors.

3. Wine and Alcohol Products

Duties on imported wines are expected to be reduced in phases, from as high as 150 per cent to as low as 20 per cent.
While this could make European wines more accessible to Indian consumers, the impact may be mixed. Increased competition could pose challenges for some local producers, even as Indian processed food and beverage exports gain better access to European markets.

4. Chemicals

Tariffs of up to 22 per cent on chemicals are set to be almost entirely eliminated. The FTA is expected to significantly boost India’s chemical exports to the EU, particularly in segments such as organic chemicals, speciality chemicals, and pharmaceutical inputs. The near-complete removal of duties could lead to a sharp rise in shipments to Europe.

5. Processed Foods

Import tariffs of up to 50 per cent on processed foods, including items such as pasta and chocolates, are expected to be fully scrapped.
This is likely to make European food products cheaper in India, while also improving market access for Indian processed food exporters in the EU.

6. Olive oil, Fruit Juices
The EU said that India would reduce tariffs on several daily-use items it imports from Europe. It also said that the tariffs would be cut down to zero in some cases like olive oil, sheep meat and fruit juices.

Overall, the India–EU FTA is expected to create a massive free-trade market of nearly 2 billion people with a combined economic output of around $27 trillion, potentially reshaping trade, pricing, and consumer choices on both sides.