India-EU Trade Deal Nears Amid Global Tariff Woes
Goyal: FTA, GST Cuts to Counter US Tariff Impact
New Delhi: Amid rising U.S. tariffs disrupting global trade, India and the European Union (EU) are accelerating efforts to finalise a comprehensive Free Trade Agreement (FTA) by the end of 2025, aiming to strengthen economic ties and mitigate the impact of protectionist policies.
The U.S. tariffs, escalating to a 15% rate on most EU goods by July 2025 from a pre-2025 average of 1.2%, have curtailed over $300 billion in EU exports, particularly in automobiles, pharmaceuticals, and steel, contributing to a projected 0.3 percentage point reduction in EU GDP growth. This trade disruption has pushed the EU to diversify partnerships, making the India-EU FTA a strategic priority to offset losses and enhance market access.
Union Minister of Commerce and Industry Piyush Goyal, addressing the 65th Annual Session of the Automotive Component Manufacturers Association (ACMA) in Delhi today, emphasised that both sides are working with sincerity and commitment to craft a balanced agreement that benefits businesses and consumers. He stressed that negotiations require mutual give-and-take to ensure fairness, cautioning against letting the pursuit of a perfect deal stall progress.
The FTA is poised to open significant opportunities for the automotive component sector, which Goyal described as a key pillar in India’s trade negotiations. He expressed confidence that the provisions being developed will drive growth, collaboration, and innovation, leveraging India’s cost competitiveness in design, development, and research, alongside its skilled workforce. The agreement is expected to facilitate joint ventures, technology partnerships, and integration into global value chains, enabling Indian manufacturers to expand their reach in the EU market while reducing costs and creating jobs.
Maroš Šefčovič, EU Commissioner for Trade and Economic Security, highlighted the unprecedented momentum in the negotiations, describing them as the most intensive and constructive ever held between the two partners. He affirmed the shared goal of concluding the FTA by year-end, as committed by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. Šefčovič emphasised that the agreement will balance the interests of producers, exporters, and consumers, fostering trade, investment, innovation, and sustainable practices. He noted India’s growing role as a global economic driver, adding that the partnership will benefit from Europe’s technology and scale while enhancing the EU’s access to India’s expanding market.
Goyal underscored the strategic importance of the FTA, noting that India’s low vehicle penetration rate of 34 cars per thousand people presents a significant growth opportunity for the auto component sector. He also praised recent GST reforms, which reduced rates from 28 per cent to 18 per cent for auto components and to 5 per cent for tractors, calling them a landmark relief for the industry. These measures, introduced under Prime Minister Modi’s leadership, aim to make spare parts more affordable, promote formalisation, and stimulate demand, with Goyal urging the industry to pass these benefits to consumers.
The minister highlighted India’s resilience during the COVID-19 pandemic, noting that the country honoured global commitments by supplying medicines and vaccines to over 100 countries, often free of cost, earning trust as a reliable partner. Quoting Ratan Tata, Goyal encouraged the industry to transform challenges into opportunities, reinforcing India’s commitment to building a stronger economic future through the FTA and robust trade partnerships.
– global bihari bureau
