An epic agreement between India and the European Union has been struck. Aptly named 'Mother Of All Deals', it was officially announced on Tuesday by India-EU representatives. Under this Free Trade Agreement (India-EU FTA), essential goods coming from Europe will suddenly become much more affordable due to the elimination or substantial reduction of existing tariffs. There's anticipation about whether cheaper goods will be available right away now that the deal is finalized, but Commerce Secretary Rajesh Agrawal has already clarified the picture. Let’s find out more.
'Mother Of All Deals' Struck Between India-EU
After the deal was done, Prime Minister Narendra Modi declared that the agreement is not merely a trade deal but a blueprint for shared prosperity. This will unlock new opportunities for the European Union and bolster the services sector and other industries.
Following the formal announcement of the FTA, EU Council President Antonio Costa hailed it as a historic agreement and emphasized moving forward together with India. European Commission President Ursula von der Leyen pronounced it as the 'Mother Of All Deals'.
What Becomes Cheaper in the FTA?
This trade agreement is notably comprehensive, bringing costs down for several products coming to India from European countries. The automobile sector stands to benefit vastly, as tariffs on European cars will gradually reduce to just 10%. Additionally, over 90% of goods from European countries entering India may see tariffs removed or substantially decreased.
Currently, tariffs stand at 44% for machinery, 22% for chemicals, and about 11% for pharmaceuticals, with most of these slated for elimination. Beer tariffs will decrease to 50%, spirits to 40%, and cars and commercial vehicles will drop to 10%.
Furthermore, many items will see their tariffs nullified. These include a 44% tariff on machinery, 22% on chemicals, and up to 11% on medicinal products and medical devices, which will be significantly reduced or nullified. Aircraft and spacecraft will benefit from Zero Tariff. Tariffs on fruit juice and processed food have been abolished.
When Will Goods Become Cheaper?
Now, when does this historic agreement mean cheaper goods for everyone? Commerce Secretary Rajesh Agrawal provided a major update on Monday, indicating that post-finalization, the deal could be implemented by next year. However, experts suggest that some items in this agreement, offering zero or reduced tariffs, may take five years or more to materialize benefits.
