‘Mother of all deals’: India and EU finalise FTA, Pg1

Key Highlights:

• India and the European Union (EU) finalized a Free Trade Agreement (FTA) on Tuesday after almost two decades of negotiations.
• The EU will drop tariffs on 99.5% of Indian exports to the 27-nation bloc.
• India will give tariff concessions on 97.5% of imports from the EU.
• India's strategic agricultural and dairy sectors remain protected, while the EU will maintain tariffs on products like beef, sugar, and rice.
• The agreement is expected to come into force within calendar year 2026.

Detailed Insights:

• The FTA aims to strengthen stability amid global turmoil and reduce strategic dependency, with both economies accounting for a third of global trade.
• India has gained tariff reductions across 97% of tariff lines, covering 99.5% of trade value, with 90.7% of exports seeing immediate duty elimination upon implementation.
• Key labor-intensive sectors comprising more than ₹2.87 lakh crore ($33 billion) of exports will enter zero duty, enhancing competitiveness in the EU market.
• The EU has committed to 144 services sub-sectors, including IT/ITeS, professional services, and education.
• India is offering duty elimination and reductions on 92.1% of tariff lines, comprising 97.5% of EU exports to India, with immediate duty elimination on 49.6% of tariff lines.
• European sectors like machinery, aircraft, medical equipment, and pharmaceuticals will gain duty-free access to Indian markets.
• India has agreed to open up 102 sub-sectors covering EU priorities such as professional, business, telecommunications, maritime, financial, and environmental services.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers such as tariffs and quotas.
• Tariff: A tax or duty imposed on goods when they are transported across international borders.
• Ratification: The formal approval of a treaty, contract, or agreement, making it officially valid.