The world's largest trade agreement - what the EU gains and what is not there

The EU and India sign a free trade agreement linking markets of 2 billion people ( Symbolic photograph - AI generated)AI Generated Stock Image

The European Union and India will sign a free trade agreement in fresh Delhi on Tuesday 27 January, which will bring together markets with a full of 2 billion people. Brussels calls this agreement "the largest free trade agreement in the world" and focuses on reducing tariffs, especially for the European automotive industry.

The agreement is the consequence of negotiations that have lasted almost 2 decades - since 2007. On Monday, January 26, European Commission president Ursula von der Leyen and European Council president Antonio Costa will take part in celebrations 77. The Republic Day in India, commemorating the adoption of the Constitution in 1950. Von der Leyen and Indian trade minister Piyush Goyal named the treaty, as quoted by the BBC, “the parent of all contracts”.

The agreement is of clear geostrategic importance in times of global uncertainty and trade wars, especially those caused by the Donald Trump administration in the US. European-Indian trade has increased by almost 90 percent in the last decade. In 2024, European exports to India amounted to EUR 48.8 billion.

European automotive enters the 3rd planet market

The biggest beneficiary will be the European automotive industry. India plans to cut tariffs on EU cars up to 40 percent of the current 110 percent. For vehicles above EUR 15,000, the mark rate is 10 percent. An immediate tariff simplification would cover about 200,000 vehicles.

India is the world's 3rd largest automotive marketplace after the US and China, with yearly sales of around 4.4 million vehicles. European producers presently have little than 4 percent of the marketplace share. Maros Sefcovic, EU Trade and economical safety Commissioner, named Indian negotiators, as quoted by the Euronews portal, “very hard negotiators”.

In addition to motorization, European companies from green technologies, weapons and mining sectors will gain easier access to the Indian market. Indian companies will be able to export electronics, chemicals, textiles, petroleum products and steel more easily.

Agriculture and steel outside the contract

The agreement completely excludes agricultural products. This decision is intended to prevent social and political unrest akin to those related to the Mercosur Agreement. Ignacy Niemczycki, Deputy Minister of abroad Affairs, said to the Polish Press Agency: «(...) I would like to draw attention to the fact that we have a practically complete exclusion of agricultural issues, so here there is absolutely no reason to be afraid about specified issues as were in the case of Mercosur». Minister of Agriculture Stefan Krajewski assured that the impact on Polish agriculture would be minimal.

About half of the Indian population work in agriculture and fear marketplace liberalisation. electrical cars besides received peculiar treatment - exemption from tariff reductions for the first 5 years, which is to defend Indian producers specified as Tata Motors.

The Polish steel manufacture expresses concern about the expanding imports, the advanced energy costs and challenges associated with green investments without state support. The Indian request for exemption from the Union CBAM (carbon tax) was rejected. Climate protection and human rights are not “essential elements” of the agreement according to the Euractiv portal.

Note: This article was created utilizing Artificial Intelligence (AI).