(Image source from: AP)
The completion of the Free Trade Agreement between India and the European Union after 18 years will bring happiness to many, including wine and whiskey lovers as well as car fans. The trade agreement, referred to by European Commission President Ursula von der Leyen as "the most important trade deal," will allow Indian products to enter European markets. Additionally, this will make European imports more affordable in India by lowering tariffs. Cars from Europe like Mercedes, BMW, and Audi currently face import taxes over 100 percent. Under the new agreement, cars priced above 15,000 euros, which is about 16 lakh rupees, will now have a 40 percent tax. This tax will further decrease to 10 percent, significantly lowering the prices of these vehicles by several lakhs. An official from the Commerce Ministry informed PTI that both parties have agreed to "quota" based tax reductions to safeguard the rapidly growing Indian car industry.
The official noted that the Indian car market is mainly filled with small cars that cost between 10 lakh and 25 lakh rupees, and the EU does not have much interest in this segment. “So, we have acknowledged this, and we have determined that the EU will not export cars to India that are likely to be priced below 25 lakhs. They may produce them here, but those cars will not be exported here,” the official explained. Wine coming from European countries like France, Italy, and Spain will become much cheaper because of this agreement. At present, India imposes a 150 percent import duty on foreign wine. The new trade deal aims to reduce this duty to 20 percent, which will considerably lower prices. However, this change will happen gradually over 5 to 10 years to lessen the impact on local markets. As a result, drinks like cognac, high-end gins, and vodkas will also be more affordable in India. Nonetheless, there will not be any duty reductions for wines priced below 2.5 euros to protect the Indian market. Additionally, Indian wines will also receive duty reductions in EU member nations as part of the agreement.
Europe is recognized for its advanced medical technologies. This agreement will lower the cost of imported medicines for cancer and other serious diseases in India. It will also bring down the prices of medical devices brought in from Europe to India. The agreement will allow Indian-made medicines to enter 27 European markets. The trade deal removes tariffs on spare parts for aircraft, mobile phones, and high-tech electronic goods coming from Europe. This change will lower the production costs of gadgets in India, which will help the final consumers. As a result, mobile phones might become less expensive. There is a plan to eliminate tariffs on iron, steel, and chemical goods. This could lead to lower prices for raw materials in the construction and manufacturing industries, which will benefit homebuyers. This trade deal is a significant achievement for Indian exports and will create opportunities in the large European market for Indian-made clothing, leather, and jewelry.
