India and the European Union announced on Tuesday, January 27th the “mother of all deals,” a huge trade pact to create a market of two billion people, reached after two decades of negotiations.
EU chiefs and Prime Minister Narendra Modi hope the pact will help shield against challenges from the world’s two leading economies, the United States and China.
The agreement will cut or eliminate tariffs on almost 97% of European exports, saving up to 4 billion euros annually in duties, the EU chiefs said.
“A mother of all deals,” Modi said on Tuesday in the capital New Delhi, where he met with European Commission President Ursula von der Leyen and European Council President António Costa.
“This deal will bring many opportunities for India’s 1.4 billion and many millions of people of the EU,” Modi said, adding the agreement “represents about 25 percent of global GDP, and one-third of global trade.”
“Europe and India are making history today,” von der Leyen said in a statement. “We have created a free trade zone of two billion people, with both sides set to benefit.”
Under the agreement, India is expected to ease market access, and European firms will get privileged access to the Indian financial services and maritime transport market.
Tariffs on cars will be gradually lowered from a top rate of 110% to as low as 10%— with a quota of 250,000 vehicles—while duties on wines progressively go down from 150% to 20%.
Currently at 50%, tariffs on processed foods—including pasta and chocolate—will be eliminated, according to the EU.
