EU and India sign trade deal - Lower tariffs on cars and wine - EU-India Trade Deal Slashes Tariffs on Cars, Steel, and Food in Historic Pact
A landmark trade deal between the EU and India was signed in New Delhi on January 27, 2026. The agreement slashes tariffs on cars, steel, and agricultural goods, opening new opportunities for businesses on both sides. European automakers, currently exporting just 3,000 vehicles a year to India, now face lower barriers to entry.
The deal was finalised by EU Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi. It introduces a phased reduction of import duties, with automotive tariffs dropping from 110% to a maximum of 10% for up to 250,000 vehicles annually. German Chancellor Friedrich Merz praised the agreement as a 'very positive signal' for trade relations.
European carmakers like Volkswagen, Mercedes-Benz, BMW, Renault, Stellantis, and Audi stand to benefit the most. The German Association of the Automotive Industry (VDA) described the deal as a 'tremendous opportunity' for expanding into India's growing market. Currently, high tariffs have limited EU car exports to just 3,000 units per year. Beyond automobiles, the agreement removes tariffs on 1.6 million tons of Indian steel exports to the EU annually. European agricultural producers will also see reduced duties on wine, olive oil, pasta, and chocolate, while India gains better access for tea, coffee, and fresh produce. However, sensitive products like beef, pork, poultry, rice, and sugar remain excluded to avoid disputes. The EU has positioned the deal as part of a broader push against protectionism, countering trade barriers from Washington and Beijing. By lowering costs for businesses, the agreement aims to boost two-way trade in key sectors.
The EU-India trade deal cuts tariffs on cars, steel, and food products, creating new export opportunities. European automakers could see a significant increase in sales, while Indian steel and agricultural producers gain better access to EU markets. The agreement takes effect immediately, with phased reductions set to unfold over the coming years.
