93% of Indian goods are duty-free – Free Trade Agreement with the European Union
Delhi: A free trade agreement between India and the European Union has been finalized. According to the agreement, 93 percent of goods exported from India to EU countries will be duty-free.
Similarly, India will also not impose any duties on 90 percent of goods imported from EU countries for a period of 10 years.
India invited EU leaders as special guests to the country’s 77th Republic Day celebrations in Delhi on Monday and also held a summit with them to finalize the free trade agreement negotiations.
European Commission President Ursula von der Leyen and European Council President Antonio Costa, who were in India with a high-level delegation to attend the summit, were both special guests at the Republic Day celebrations.
Following this, the high-level EU group led by them participated in the summit held in Delhi on Tuesday to finalize the free trade agreement negotiations. The Indian side was represented by a high-level group led by Prime Minister Narendra Modi. After the talks, both sides announced that the agreement had been finalized. What are the benefits of the agreement?:
Union Minister of Commerce and Industry Piyush Goyal said: When the India-EU Free Trade Agreement comes into effect, more than 99 percent of India’s exports by value will receive unprecedented market access.
Except for automobiles and iron and steel products, all other goods (93%) exported from India will get duty-free access to the EU market. In addition, the EU will provide duty reductions and quota-based tax concessions on the remaining 6 percent of Indian exports, including auto parts, he said.
The EU currently imposes an average tariff of 3.8 percent on goods imported from India, but under this agreement, this tariff will be reduced to 0.1 percent.
The EU is currently imposing additional duties on some goods imported from India. In particular, chemical products are subject to duties of up to 12.8 percent. The current duties are 6.5 percent on plastic and rubber products, 17 percent on leather and footwear, 12 percent on textiles and ready-made garments, 4 percent on gems and jewelry, 7.7 percent on railways, aircraft, ships, and boats, 10.5 percent on wood products and light consumer goods, 4.7 percent on toys, and 4.7 percent on sports goods. The European Union is now going to eliminate all these duties.
The European Union has not given any concessions to Indian exporters under the carbon tax agreement, which aims to reduce environmental impact. Officials said that, however, the agreement promises that any concessions given by the European Union to other countries on this tax will automatically be extended to Indian exporters as well.
90% of EU goods to receive duty-free access
Under the Free Trade Agreement, India will provide duty-free access to 90 percent of EU goods in its markets. Initially, India will eliminate duties on only 30 percent of EU goods on the first day of signing the agreement. Later, this will be gradually extended to other goods.
Specifically, India will reduce taxes on European Union goods such as cars, wine, spirits, beer, olive oil, kiwis and pears, fruit juices, bread, biscuits, pasta, chocolates and other processed products, pet food, and mutton and other meats. Currently, India levies duties ranging from 33 to 150 percent on these goods.
The tax reduction is likely to lower the prices of major luxury cars like BMW, Mercedes, Lamborghini, Porsche, and Audi in the Indian market. Officials also said that India will provide quota-based tax concessions on European Union goods.
According to the agreement, while the European Union is gradually reducing taxes on Indian vehicles, India is going to reduce taxes on European Union cars by 10 percent. India is set to reduce taxes on cars based on an annual quota of 250,000 units.
India will grant duty-free market access to imports from the European Union for machinery, electrical equipment, aircraft, medical and surgical instruments, spectacles, plastics, chemicals, iron and steel, pharmaceuticals, and other products.
The free trade agreement will also allow bilateral professionals from various sectors, including information technology, business services, education, financial services, tourism, construction, and others, to travel to India and EU countries for short-term business purposes.
Ministry of Commerce officials said that steps have also been taken by the European Union to grant entry permits for post-graduate work to Indian students pursuing higher education in EU countries.
