India-EU FTA to slash car tariffs, boost textiles, experts say
India-EU FTA to slash car tariffs, boost textiles, experts say
India-EU Free Trade Agreement could cut car duties sharply and offer zero-duty textiles, signaling a manufacturing boost amid ongoing market challenges.
India and the European Union appear poised to conclude a wide-ranging Free Trade Agreement that would scrap or sharply cut duties on a broad range of goods, including cars and textiles. The talks, highlighted during recent Davos meetings and ahead of a joint EU-India summit, come as both sides push to unlock greater manufacturing and trade power. Prime Minister Modi has touted the deal as the 'mother of all deals' that could boost India's manufacturing sector and expand export opportunities, with the pact potentially representing a sizable share of global GDP.
On autos, industry observers say the agreement would dramatically reduce Indian import duties on passenger cars. European automakers like Volkswagen and Renault have been seeking growth beyond Europe, and the tariff cuts could open a new channel to Indian consumers. Yet market realities persist, with ongoing pressure from higher US tariffs and fierce price competition in China serving as reminders that changes in tariff policy are only part of the broader competitiveness challenge for Indian manufacturers.
On textiles, leaders like Gautam Singhania of the Raymond Group say zero-duty access to the EU market would be hugely beneficial. Textiles remain a major employment generator in India, and duty-free access could significantly boost exports and strengthen the sector’s global competitiveness. A strong textile deal would also position India more favorably in future negotiations with other major economies, including the United States, Singhania noted.
Analysts caution that while tariff liberalization is a positive step, the real test lies in rules of origin, services access, investment protections, and dispute resolution mechanisms. The government has actively sought to attract investment, with officials noting the Davos discussions and other engagements as signs of momentum. As the joint EU-India summit approaches, officials hope to finalize a framework that could pave the way for tariff cuts on cars, chemicals, and beer, among other sectors, unlocking a new era of trade and manufacturing partnerships.
