EU-turn: Luxe cars, spirits to cost less under 'mother of all deals'

NEW DELHI: India and the European Union on Tuesday announced the finalisation of "mother of all FTAs", which will result in gradual tariff reduction for 96% of exports from both sides, while keeping contentious items, such as cereals and dairy products, outside the ambit.The deal comes against the backdrop of stiff tariffs imposed on India by US President Donald Trump and is expected to bring cheer to exporters looking to diversify markets and shrug off some of the global uncertainty triggered by international trade turmoil. "This is not just a trade agreement. It is a new blueprint for shared prosperity," PM Narendra Modi said after the two sides announced the conclusion of talks that started 18 years ago. The deal got an impetus during the last year as Trump started weaponising tariffs to push his agenda."We have created a free trade zone of two billion people, with both sides set to benefit...We are not only making our economies stronger - we are also delivering security for our people in an increasingly insecure world," said European Commission President Ursula von der Leyen.Indian textiles, marine products, leather and footwear, gems and jewellery, toys and sports goods will get zero-duty access, helping them compete more favourably with competition from Bangladesh, which has a 12% duty advantage in garments and textiles, and Vietnam, which enjoys a significant edge in footwear, clothing and electronics due to a trade pact with the EU.For Indian consumers, the FTA will mean cheaper chocolates, olives, cars that cost upwards of Rs 25 lakh as well as wine, vodka and beer (see graphic). Duty cuts on automobiles and wine were two key demands from the EU, and will see tariffs fall from over 100% to as low as 10% for cars.In the case of wine and cars, the benefit of lower tariff will be available for a specified number of cars annually and will be reduced in a phased manner. "Small cars have been protected, which is the bulk of the Indian market," said an official.European companies can manufacture in India and export as they enjoy zero duty benefits on a host of products. This is expected to boost 'Make in India' initiatives.