India, EU Reach Landmark Trade Deal, Tariffs to Be Slashed on Most Goods

• India and the European Union struck a long-delayed deal on Tuesday that will slash tariffs on most goods, aiming to boost two-way trade and reduce reliance on the United States amid growing global trade tensions.
• The deal is expected to double EU exports to India by 2032 by eliminating or reducing tariffs in 96.6% of traded goods by value and will lead to savings of 4Bn euros ($4.75Bn) in duties for European companies, the EU said. The EU will cut tariffs on 99.5% of goods imported from India over seven years, with tariffs to be cut to zero on Indian marine goods, leather and textile products, chemicals, rubber, base metals and gems and jewellery, India's trade ministry said in a statement. India and the EU said agriculture-related items like soya, beef, sugar, rice and dairy have been kept out of the purview of the trade deal.
• The two-decade-long EU–India trade talks gained momentum after Washington imposed a 50% tariff on some Indian goods, and as U.S. allies pushed back against President Donald Trump’s tariff threats and his bid to take over Greenland. Canada's Prime Minister Mark Carney, in a speech that got a standing ovation in Davos last week, urged middle powers to come together to avoid becoming victimised. He is planning to visit India to sign deals on uranium, energy and minerals, after striking a deal recently with China.
• Before signing the deal with New Delhi, the EU agreed a pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland. During the same period, New Delhi finalised pacts with Britain, New Zealand and Oman.
• Trade between India and the EU stood at $136.5Bn in the fiscal year through March 2025, compared to $132Bn of trade between India and the U.S., and $128Bn between India and China. The formal signing of the India-EU deal would take place after legal vetting, expected to last five to six months, an Indian government official aware of the matter has said. The vetting process in the EU region could be subject to some setbacks, as in the case of Mercosur. EU lawmakers have voted to challenge the EU-Mercosur agreement in the bloc's top court.
• The move, passed with 334 votes in favour, 324 against, and 11 abstentions, was initiated by lawmakers concerned that the agreement’s structure and mechanisms violate EU principles. They also seek to clarify whether the deal's "rebalancing mechanism" restricts the EU’s sovereignty to pass future environmental and consumer health laws.

(Source: Reuters)