After signing a free trade agreement.. President of the European Commission: “Europe and India are making history”

European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi announced today the conclusion of a free trade agreement, under which India will gradually reduce duties on imported cars from 110% to about 10%, and will also eliminate duties on auto parts after five to ten years. In addition to significantly reducing duties on European agricultural products, and canceling duties estimated at 40% on olive oil.

Von der Leyen

India and the European Union on Tuesday formally completed a comprehensive free trade agreement, the culmination of two decades of negotiations, creating a “free trade area for two billion people.”

In light of the volatile geopolitical situation, this agreement aims to enable both sides to better protect themselves from Chinese competition and the repercussions of the US trade war.

In a speech he delivered in New Delhi before his meeting with European Council President Antonio Costa and European Commission President Ursula von der Leyen, Modi praised the agreement, saying: “It is described in the world as the most important agreement.”

He added: “This agreement will provide many opportunities for India’s population of 1.4 billion people, and for millions of European Union citizens,” noting that it “covers approximately 25% of the global gross domestic product and a third of global trade.”

“Today, Europe and India are making history,” von der Leyen said in a post on the X platform, adding, “We have concluded the most important agreement ever. We have created a free trade area that includes two billion people from which both parties will benefit.”

Germany, through its Finance Minister Lars Kijbael, welcomed the agreement, saying in a statement that “Europe and India are linked by their economic strength, their ability to innovate, and common interests.” The Minister stressed that “this agreement creates new opportunities for growth and the creation of quality jobs.”

The last obstacles to completing the agreement were removed on Monday during the final negotiations between the negotiators. India and the European Union hope that this agreement will boost their trade volume by reducing customs duties in many sectors.

According to Brussels, reducing Indian customs duties on European imports would allow the European Union to save up to 4 billion euros annually.

Cars and food

India intends to reduce customs duties on cars manufactured in Europe from 110% to 10%, and completely eliminate customs duties on pasta and chocolate, which currently stand at 50%, according to the European Union.

“The European Union expects to benefit from the highest level of access ever granted to a trading partner in the Indian market, which has long been protected,” von der Leyen said upon her arrival in India on Sunday, anticipating a doubling of European exports.

In 2024, the volume of trade exchange between the two sides reached 120 billion euros in goods, an increase of nearly 90% in ten years, and 60 billion euros in services, according to the European Union.
Brussels is looking at the huge market represented by the most populous country in the world, with very strong growth of 8.2% year on year in the last quarter of last year.

According to the International Monetary Fund, India is expected to surpass Japan this year to become the fourth largest economy in the world, after the United States, China and Germany. It may reach the top three before 2030, according to its government.

For its part, New Delhi sees Europe as an indispensable source of the technologies and investments it desperately needs to accelerate its modernization and create millions of jobs for its population.

New Delhi and Brussels also intend to initial Tuesday an agreement on the movement of seasonal workers, the exchange of students, researchers and some highly skilled professionals, in addition to a security and defense agreement.

“India and Europe have made a clear choice: strategic partnership, dialogue and openness,” von der Leyen wrote on the X platform. “We are showing a divided world that another path is possible.”

In defense matters, New Delhi has diversified its purchases of military equipment by moving away from its traditional supplier Russia, while Europe seeks to do the same with the United States.