30-plus European products set to get cheaper in India--but wait at least 6 months

The newly concluded India–European Union Free Trade Agreement (FTA) is expected to significantly lower import duties on a wide range of European goods, from cars and machinery to wine, chocolates and processed food.

According to an EU fact sheet, steep tariffs—up to 44 percent on machinery, 22 percent on chemicals and 11 percent on pharmaceuticals—will largely be eliminated over time.

The agreement is expected to benefit Indian consumers through lower prices and greater product choice, while also opening up new export opportunities for Indian businesses.

Products that will get cheaper

The FTA covers more than 30 product categories. Key items that will see tariff reductions include:

• Machinery and electrical equipment
Current tariff: up to 44 percent
Future tariff: 0 percent for almost all products

• Aircraft and spacecraft
Current tariff: up to 11 percent
Future tariff: 0 percent for almost all products

• Optical, medical and surgical equipment
Current tariff: up to 27.5 percent
Future tariff: 0 percent for 90 percent of products

• Plastics
Current tariff: up to 16.5 percent
Future tariff: 0 percent for almost all products

• Pearls, precious stones and metals
Current tariff: up to 22.5 percent
Future tariff: 0 percent for 20 percent of products, with tariff cuts for another 36 percent

• Chemicals
Current tariff: up to 22 percent
Future tariff: 0 percent for almost all products

• Motor vehicles
Current tariff: 110 percent
Future tariff: 10 percent, subject to a quota of 2,50,000 vehicles

• Iron and steel
Current tariff: up to 22 percent
Future tariff: 0 percent for almost all products

• Pharmaceuticals
Current tariff: 11 percent
Future tariff: 0 percent for almost all products

• Wine
Current tariff: up to 150 percent
Future tariff: 20 percent for premium wines, 30 percent for medium-range wines

• Spirits
Current tariff: up to 150 percent
Future tariff: 40 percent

• Beer
Current tariff: 110 percent
Future tariff: 50 percent

• Olive oil, margarine and other vegetable oils
Current tariff: up to 45 percent
Future tariff: 0 percent

• Kiwis and pears
Current tariff: 33 percent
Future tariff: 10 percent within quota

• Fruit juices and non-alcoholic beer
Current tariff: up to 55 percent
Future tariff: 0 percent

• Processed food (bread, pastries, biscuits, pasta, chocolate, pet food)
Current tariff: up to 50 percent
Future tariff: 0 percent

• Sheep meat
Current tariff: 33 percent
Future tariff: 0 percent

• Sausages and other meat preparations
Current tariff: up to 110 percent
Future tariff: 50 percent

It's a long way

Although the agreement has been politically concluded, it will take several months before it becomes operational. According to the European Commission, the remaining steps include:

• Publication of negotiated draft texts
• Legal revision and translation into all official EU languages
• Proposal of the agreement to the EU Council
• Adoption by the Council
• Formal signing of the agreement between India and the EU
• Approval by the European Parliament
• Final Council decision allowing the deal to enter into force
• Ratification by India

The legal and ratification process is expected to take around six months.

25% global GDP

Prime Minister Modi said the agreement represents nearly 25 percent of global GDP and about one-third of global trade, and would create major opportunities for businesses and consumers on both sides.

Once implemented, the FTA is expected to reshape trade flows between India and Europe, with a visible impact on prices in Indian markets over the coming years.

(By arrangement with livemint.com)