Filenews 28 January 2026
The EU and India described the multi-level agreement they signed yesterday as historic. "We have created a free trade zone of 2 billion people, with both sides gaining economically. We sent a message to the world that rules-based cooperation continues to deliver important results. And, best of all, this is just the beginning, we will build on this success and develop our relationship to become even stronger," was the comment of Commission President Ursula von der Leyen.
The agreement is also seen as a response by the EU and India (the 4th largest economy in the world) to the tariff war declared by the US president, with the recipients of the increased tariffs including the EU and India.
The message sent by the two parties is concretized in the well-known "there are orange trees elsewhere, which make oranges", referring to the fluency they maintain to look elsewhere for trading partners, bypassing the tariff trades set by Trump for their penetration of the American market.
The US government had not officially reacted to the agreement until last night. Even before the agreement was officially announced, US Treasury Secretary Scott Bennett had expressed his displeasure. "The US imposed 25 percent tariffs on India for the purchase of Russian oil, but the Europeans signed a trade agreement with New Delhi," he said on Monday night, arguing that Europe was financing the "war" against itself by buying Russian refined petroleum products from India.
In general:
- With the agreement, India will phase out or reduce tariffs on 96.6% of the EU's exports of goods.
- The EU will release 99.5% of its tariffs on goods imported from India within seven years.
- For European exporters, the Commission estimates savings of up to €4 billion customs duties per year.
- The European Commission expects the agreement to double the EU's exports of goods to India by 2032, supporting hundreds of thousands of jobs in industry, manufacturing, agriculture and services.
Tariff changes by category
- Machinery and electrical equipment: The EU currently exports €16.3 billion worth of products to India, which are subject to tariffs of up to 44% Gradually, tariffs will be reduced to zero from India over 5 to 7 years.
- Aircraft and spacecraft: Exports from the EU are currently worth around €6.4 billion and are subject to tariffs of up to 11%. In the next 5 years, tariffs will be reduced, to be reduced to zero within a decade.
- Optical, medical, and surgical equipment: European exports to India are worth €3.4 billion, with forests up to 27.5%. For 90% of the Products, tariffs will be phased out.
- Plastics: The EU exports €2.2 billion worth of products to India, subject to 16.5% tariffs. Tariffs will be phased out over a decade.
- Pearls, gemstones and metals: European exports worth €2.1 billion, with tariffs of up to 22.5%. The agreement provides for zero tariffs for 20% of exports and a significant reduction for another 36% of exports.
- Chemicals: Exports worth €3.2 billion, with 22% tariffs. It is planned to abolish tariffs gradually, within a decade.
- Vehicles: Exports from the EU worth €1.6 billion, with 110% tariffs. Reduction of tariffs to 10% for about 250,000 vehicles, in the first phase.
- Iron and steel: Exports worth €1.5 billion, with tariffs of up to 22%. The agreement provides for the elimination of tariffs.
- Pharmaceuticals: Exports worth €1.1 billion, with tariffs of up to 11%. A gradual abolition of tariff charges is planned.
What changes for agricultural products
- Olive oil is currently subject to 45% tariffs, and India has pledged to abolish them.
- The tariffs that India currently imposes on wines from EU countries will be reduced from 150% to 20 or 30%. Tariffs on high-alcohol beverages will be reduced to 40% from 150% today, while for European beer the tariff will fall from 110% to 50%.
- For processed foods from EU countries, such as dough, bread, confectionery products and chocolate, the tariffs will be zero.
- For products such as fruit juices and lamb and goat meat, the tariffs currently imposed by India will also be zeroed.
- For sausages and other meat preparations, tariffs will be reduced from 110% to 50%.
- For some fresh fruit, tariffs will be reduced from 33% to 10%.
What was left out of the agreement
For a large part of the production of agricultural and livestock products, the EU and India have agreed not to change the tariff regime, due to the importance of the products for the two regions.
According to APE and AFP, the EU will maintain tariffs on Indian exports of beef, sugar, rice, poultry, milk powder, honey, bananas, soft wheat, garlic and ethanol. In addition, the EU will apply "regulated" quotas - with reduced tariffs - on imports of Indian products such as lamb and beef, corn, grapes, cucumbers, dried onions, rum with the base of molasses and starch.
The agreement also provides for safeguard clauses that will allow targeted measures to be taken if an agricultural sector is destabilised as a result of the agreement. India and the EU will also negotiate India's recognition of European protected geographical indication products.
Finally, Brussels assures that all imports from India will have to comply with European regulations in the field of health and food safety.
Exports and workers
As part of yesterday's agreement, India and the EU also signed a protocol of agreement aimed at facilitating the entry into the countries of the Union of Indian skilled workers (for example in the technology sector), but also seasonal workers in labour-intensive sectors.
The EU has pledged to give India a quota of steel that can be imported into Europe duty-free (1.6 million tonnes per year). In return, India is waiving a challenge before the World Trade Organization to protectionist measures announced by the EU in order to rescue the European steel industry.
Other Indian sectors, such as textiles, are expected to benefit from this agreement.
The EU has agreed to provide €500 million in financial support over the next two years to help India reduce its greenhouse gas emissions.
