India and the European Union have ended negotiations long-awaited free trade agreement as both sides are looking to cushion the effects of strained ties with the US.
The pact Paves the way for freer trade in goods and services among the 27-country EU and India, collectively signifying a market of around 2-billion people.
Key details of the deal consist of:
ADVANTAGES FOR EU EXPORTERS:
- Indian tariffs on 30% of goods traded with EU to drop to zero instantly
- Tariffs will be removed or decreased on over 90% of EU exports
- EU firms to keep as much as 4 billion euros ($4.74 billion) a year in duties
- Improved access for EU firms in financial and maritime services
- Simplified customs guidelines and stronger intellectual property protection
- India’s duties on vehicles imported from EU to fall from 110% to 10% over 5-years, underneath a 250,000-vehicle yearly quota, possibly benefitting Volkswagen (VOWG.DE), BMW (BMWG.DE), Mercedes-Benz (MBGn.DE), and Renault (RENA.PA).
- India absolutely scraps tariffs on most industrial imports from EU, consisting of machinery and electrical equipment (presently at 44%), chemicals (up to 22%) and pharmaceuticals (11%)
ADVANTAGES FOR INDIAN EXPORTERS:
- At launch of deal, the EU will scrap all tariffs on 90% of Indian goods
- Zero tariffs to be increased to 93% of Indian goods within 7-years
- Partial cuts and quotas for approximately 6% of Indian goods
- 99.5% of bilateral trade gets a few form of tariff concession
- India to keep autos and agriculture out of full tariff elimination
- EU’s average tariff rate falls from 3.8% to 0.1%
- Tariffs reduce to zero on main Indian exports to the EU, which includes marine products (recently at up to 26%), chemicals (12.8%), plastics/rubber (6.5%), leather/footwear (17%), textiles (12%), apparel (4%), base metals (10%), and gemstones and jewelry (4%), amongst some others.
CARS: QUOTAS AND EXCLUSIONS
- EU cars priced beneath 15,000 euros ($17,800) excluded from the deal.
- Cars above that threshold cut up into 3-segments each with quotas and separate tariffs. Tariffs on most cars reduce to 30%–35% at release of deal, then phased down to 10%. Indian officials stated this would be over 5-years while an EU official said it would be over 10.
- Electric vehicle tariff cuts start from 5-year
- Final quotas will be 160,000 internal combustion engines and 99,000 electric vehicles from the EU.
- No duty cuts outside quotas and no tariff discount on Completely Knocked Down (CKD) kits
STEEL AND CARBON RULES
- India looking for stepped forward to get access to tariff-free EU steel import quotas as an FTA partner, with the final results due by June 30, ahead of EU rules taking effect on July 1. An EU official says India gets 1.6 million metric tons duty-free, although that is about half of of what India has been exporting to the EU yearly, with the bloc seeking to halve tariff-free steel imports overall.
- No India-specific exemption from the EU’s carbon duties, although India says it can negotiate if EU presents flexibility to some other nation.
- A technical group will support Indian corporations confirm carbon footprints, along a separate agreement to make certain EU technical and financial guide to assist emission cuts in India
AGRICULTURE: ACCESS WITH SAFEGUARDS
- Indian tariffs on EU agri-food exports that attracted average duties of over 36%, reduce or removed
- Sharp cuts on tariffs on EU wines, spirits, beer, olive oil, processed foods and some fruits
- Indian duties on top rate wine will slowly fall from a 150% to among 20% and 30%, with the price in year one at 75%. For spirits, the rate will drop from as much as 150% to 40% over 7-years, and over 10-years for gin.
- Beef, rice, sugar, dairy and poultry excluded; EU food safety rules unchanged and safeguard clause to limit imports in case of marketplace disruption.
SERVICES, SUSTAINABILITY, DIGITAL TRADE
- The EU gives India access to 144 services sub-sectors, India opens 102 sub-sectors to the EU, consisting financial, maritime and telecoms
- Binding rules set on labour rights, environment, women’s empowerment and climate cooperation
- Digital trade guidelines to help business even as protecting privacy, security and public policy
RULES AND NEXT STEPS
- Rules of origin prevent third-country goods routing by India for tariff advantages
- Disputes managed by independent panels with binding rulings
- Draft texts to be posted, followed by legal review, translation and approval by EU governments, the European Parliament and India, anticipated possibly within a year.
($1 = 0.8424 euros)
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