Pasta, chocolate, beer, wine, cars set to be cheaper:How will the India-EU free trade deal ease the burden on your pocket?

India-EU has reached a historic free trade agreement on 27 January 2027. It opens up a 140 crore people’s market to European suppliers and a 27-country market to Indian producers. The deal is dubbed the ‘Mother of All Deals’ as it integrates a market of nearly 2 billion people and covers about 25% of the world’s GDP. It encompasses one-third of the total global trade. The free trade agreement reduces duties on European imports by up to 97%. It is expected to significantly lower the cost of items such as cars, beer and medical equipment. In today’s explainer, we look at which items get cheaper after the announcement of the FTA… What will get cheaper after the deal?
With the conclusion of trade negotiations, most items imported from European countries are expected to become cheaper. India has agreed to reduce duties on many European products to zero per cent, meaning there will be no additional tariffs beyond the producer price in Europe. The agreement covers a wide range of goods, including machinery and electrical equipment, aircraft and spacecraft, optical, medical and surgical instruments, plastics, precious stones and metals (around 22%), chemicals, motor vehicles, iron and steel, and pharmaceuticals. Under the deal, tariffs on cars will be reduced in phases from a peak of 110% to as low as 10%, while duties on wine will be gradually cut from 150% to 20%. Tariffs on processed food items—such as pasta, bread, biscuits and chocolate—currently set at 50%, will be fully removed, according to the European Union. Duties on olive oil, margarine and other vegetable oils will also be scrapped from the existing 45% rate. In addition, fruit juices and non-alcoholic beer will come under a zero-tariff regime. How will the deal reduce the burden on your pocket?
Yes, the trade agreement is expected to ease pressure on consumers for several reasons: For Indian buyers, European cars, beer, and a range of food products are likely to become more affordable. The European Union has said that tariffs on 96.6% of its goods exported to India will be reduced or removed, translating into annual duty savings of up to €4 billion (₹432 billion) for European exporters. Under the pact, duties on EU exports such as fruit juices and processed foods will be eliminated, tariffs on olive oil, margarine and other vegetable oils will be reduced or scrapped, and levies on spirits will be brought down to 40%. In major industrial segments, tariffs on 90% of European optical, medical and surgical equipment will be withdrawn, while duties on nearly all EU aircraft and spacecraft exports to India will also be removed. The agreement will also eliminate high tariffs—up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals. The EU believes these measures will significantly improve market access and could help double its exports to India by 2032. At present, bilateral goods trade between India and the EU stands at about $136 billion (over ₹11 lakh crore). As part of the deal, India is expected to secure duty-free access for key export sectors such as textiles, leather and marine products, in exchange for offering tariff concessions on items like automobiles, wines and spirits. Which sectors will benefit from the free trade agreement?
Sectors such as textiles, gems and jewellery, leather and jute are expected to gain significantly from the trade agreement. Indian industries are expected to supply goods and services worth up to $20 trillion to the European market. How will the deal boost India’s manufacturing sector? Indian clothes, textiles and apparel will get duty-free access to European markets worth $263 billion. The EU has also slashed tariffs on leather and footwear from 17% to 0%, opening access to a $100 billion market. This will benefit workers in leather-based industries in Kanpur, Agra, Kolhapur and other hubs. India’s gems and jewellery sector will also gain, with 100% duty-free access to the European market worth $79 billion. Indian engineering goods will get preferential access to 27 countries, benefiting MSMEs across Maharashtra, Karnataka and Gujarat. Engineering goods exports have the potential to reach $300 billion by 2030, according to Commerce Minister Piyush Goyal. With the conclusion of the deal, India is poised to tap into the EU’s $2 trillion market. The Indian chemicals and petrochemicals industry will get over 97% tariff-free entry into the $500 billion EU market. The EU will also provide preferential access to Indian exports such as grapes, tea, coffee and ghee. India will enjoy tariff-free access to the European seafood market worth over $50 billion. Will the service sector also be affected? The Prime Minister said the deal would not only give a major push to manufacturing in India but also accelerate growth in services-related sectors. “This trade deal will boost manufacturing in India, expand services, and strengthen global confidence in India among businesses and investors,” Modi said. Why is the Trump administration frustrated with the agreement?
India and the European Union sealed the landmark free trade agreement after nearly 20 years of negotiations. Global trade experts say the deal could significantly reshape economic alignments at a time of strained ties with the Trump administration. The US has imposed 50% tariffs on Indian goods—25% as base tariffs and an additional 25% linked to India’s purchases of Russian oil in August. U.S. Treasury Secretary Scott Bessent has openly criticised European partners for advancing the India-EU agreement while simultaneously imposing tariffs on India. He specifically warned that the 25% duties linked to India’s Russian oil imports could end up “funding a war against itself.” Graphics: Gaurav Raj