India and EU strike historic trade deal after expediting talks, amid US trade tensions

India and the European Union (EU) finalised a long-awaited trade agreement on Tuesday, cutting tariffs on most goods to expand bilateral trade and reduce dependence on the United States amid rising global trade tensions. The accord is projected to double EU exports to India by 2032, covering 96.6% of traded goods by value, and is expected to save European companies around $4.75 billion in duties, the EU said.

Under the deal, the EU will eliminate tariffs on 99.5% of Indian imports over seven years, with zero tariffs on marine products, leather, textiles, chemicals, rubber, base metals, and gems and jewellery, India’s trade ministry noted. Key agricultural products, including soy, beef, sugar, rice, and dairy, remain outside the agreement’s scope.

The deal comes after the EU secured agreements with Mercosur, Indonesia, Mexico, and Switzerland, while India finalised pacts with the UK, New Zealand, and Oman. Bilateral trade between India and the EU reached $136.5 billion in the fiscal year through March 2025, surpassing India’s trade with the US at $132 billion and China at $128 billion. 

The deal does not provide immediate relief for Indian firms affected by the EU’s Carbon Border Adjustment Mechanism (CBAM), which applies to steel, cement, electricity, fertilisers, and other decarbonisation-sensitive goods. India has, however, secured EU assurances on potential flexibilities if similar concessions are granted to third countries.

A formal signing is expected after legal vetting, which could take five to six months, with implementation anticipated within a year, an Indian official said. Complementing the trade measures, the EU pledged €500 million in financial support over two years to assist India in reducing greenhouse gas emissions.

Written: Farid Muzaffar