The sealing of the Free Trade Agreement between India and the European Union after an 18-year wait will bring joy to many, connoisseurs of wine and whiskey and automobile enthusiasts, among them.
The trade pact, which European Commission President Ursula von der Leyen had described as "the mother of all trade deals", will open up the European markets for Indian goods. At the same time, it will make imported European items cheaper in India by reducing duties.
Mercedes, BMW, Audi Cars To Get Cheaper
European cars such as Mercedes, BMW and Audi currently attract an import duty of over 100 per cent. According to the agreement, cars costing more than 15,000 euros -- around Rs 16 lakh -- will now attract a duty of 40 per cent. This duty will be further reduced to 10 per cent, slashing prices of these cars by lakhs.
The two sides have agreed on "quota" based duty concessions, an official from the Commerce Ministry told PTI. This has been done to protect the Indian auto industry, which is growing at a fast pace.
The official said India's auto sector is largely dominated by small cars (costing between Rs 10 lakh - Rs 25 lakh) and the EU's interest in that area is "not great".
"So, that has been taken cognisance of, and we have decided that cars that are likely to sell below Rs 25 lakhs in this country, the EU will not be exporting those cars to India. They may manufacture it here, but they will not be exporting those cars," the official said.
Lifting The Spirits
Wine imported from European markets such as France, Italy and Spain will now be much cheaper, thanks to the agreement. Currently, India charges an import duty of 150 per cent on imported wine. The new pact proposes reducing this to 20 per cent, meaning that the prices will reduce significantly. This, however, will be implemented gradually over a period of 5-10 years to contain the impact on domestic markets. This will make cognac, premium gins and vodkas cheaper in India.
There will, however, be no duty concessions for wines costing below 2.5 euros. This is to protect the Indian market. Indian wines, too, will get duty concessions in EU member countries, according to the pact.
Medicines To Get Cheaper
Europe is known for its state-of-the-art healthcare technologies. This agreement will make imported medicines for cancer and other critical illnesses cheaper in India. It will also reduce the prices of medical equipment imported from Europe to India. The pact will also provide India-manufactured medicines with a market in 27 European markets.
Electronic And High-Tech Machinery
The trade deal ends tariffs on spare parts of aircraft, mobile phones and high-tech electronic items imported from Europe. This will reduce the manufacturing costs of gadgets in India, benefiting the end consumer. This means mobile phones could get cheaper.
Steel and Chemical Products
There is a proposal for zero tariffs on iron, steel and chemical products. This would potentially reduce raw material prices in the construction and industrial sectors, benefiting homebuyers. The trade deal is a big win for Indian exports and will open up the huge European market for garments, leather and jewellery made in India.
