India’s agriculture red lines fully respected in FTA, says EU Trade Commissioner Maros Sefcovic

India EU FTA

• India and EU conclude FTA talks, deal expected to start by 2027
• Tariffs on cars, wines, spirits, and textiles to be significantly reduced
• Indian agriculture and labour-intensive sectors protected under the agreement

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India and the European Union have concluded negotiations on a long-awaited Free Trade Agreement (FTA), marking a major milestone in bilateral economic ties. The agreement is expected to come into force by 2027, EU Trade Commissioner Maros Sefcovic said in an exclusive interview with CNBC-TV18's Parikshit Luthra.

“Very happy to announce that India-EU have concluded talks on the FTA,” Sefcovic said, adding that the deal goes well beyond tariff reductions and is aimed at ensuring long-term economic security for both sides.

Under the agreement, nearly 96–97 per cent of tariff lines between India and the EU have been liberalised. A key highlight is the automobile sector, where European carmakers will be granted export quotas for completely built units (CBUs), completely knocked down (CKD) units and components. At the same time, the quota available to Indian automotive players will be 2.5 times larger than that of the EU, with a review clause built in to adjust quotas based on market dynamics.

India’s sensitivities in agriculture have been fully protected. “India’s red lines on agriculture have been respected,” Sefcovic said, confirming that wheat, rice, maize, milk and the entire dairy sector have been kept completely out of the agreement. “What is sensitive for India and Europe has been kept out,” he added.

Tariffs on European cars, currently as high as 110 per cent, will be reduced to 35 per cent initially and eventually brought down to 10 per cent after a transition period. Duties on CKD units will be cut from 16 per cent to 8.25 per cent. The transition timelines for internal combustion engine vehicles and electric vehicles will differ, with tariff reductions on EVs kicking in at a later stage. Sefcovic noted that around 90 per cent of the Indian car market is priced below €15,000, while European car quotas will apply to vehicles priced above that level. On the other side, EU tariffs on Indian-made cars will be phased down from 10 per cent to zero over time.

The pact also delivers significant gains for Indian labour-intensive sectors. Tariffs on textiles, footwear and other labour-intensive exports from India will be eliminated, with many items becoming tariff-free and quota-free from day one of the agreement’s implementation.

In wines and spirits, tariffs on premium European wines will be slashed from 150 per cent to 20 per cent, while duties on EU spirits will come down to 40 per cent. Tariffs on olive oil and certain processed food items will be reduced to zero.

On mobility, a separate memorandum of understanding will expand opportunities for Indian citizens, particularly professionals and skilled workers, to access European markets.

Addressing concerns around the EU’s Carbon Border Adjustment Mechanism (CBAM), Sefcovic said the European steel sector is under strain and safeguard measures will come into effect from January 1, 2026. However, he emphasised that India would be treated as an FTA partner with privileged access. “India is in an excellent position,” he said, promising the “best possible assistance” to Indian companies on CBAM compliance and assuring that “no other country will be treated better than India.”

Reflecting on the negotiations, Sefcovic highlighted his close working relationship with Commerce and Industry Minister Piyush Goyal. “I had more than 10 in-person meetings with Minister Goyal. Minister Goyal and I became personal friends,” he said, adding that their conversations often went beyond trade. “When teams were stuck, we tried to find solutions as friends at a personal level,” he noted.

The conclusion of the India-EU FTA is being seen as one of the most significant trade breakthroughs for India in recent years, with wide-ranging implications for manufacturing, exports, jobs and strategic economic ties with Europe.