The European Union and India have signed a historic free trade agreement, destined to change the rules of the game for European agri-food exports. The signing, which took place in New Delhi, opens up new scenarios for wine, spirits and other quality products, but there is no shortage of environmental and social challenges linked to commercial expansion on a global scale.
Goodbye duties (or almost)
Currently, duties on wine imports into India can reach up to 150%, a real barrier for European producers. The agreement now provides for a progressive reduction in tariffs, which will drop to 30% for mid-range wines and 20% for premium wines. Whiskey, vodka, rum and gin will also see duties drop from the current 150% to 40%, while for beer the reduction will be from 110% to 50%.
Other European agri-food products, such as olive oil, pasta, chocolate, preserves and processed foods, will benefit from much reduced or, in the case of oil, even zero tariffs. A move that should benefit small and medium-sized businesses and make the Indian market more accessible for companies from the Old Continent.
Which European products will benefit most from the agreement
The EU-India agreement opens the doors in particular to high-quality European-branded agri-food and beverage products. In particular, wine, spirits and other alcoholic beverages will see a progressive reduction in duties, becoming more competitive on the Indian market. Other European food products, as already mentioned, for example olive oil, pasta, chocolate and preserves, will also benefit from very reduced or zero tariffs, facilitating the entry of small and medium-sized businesses into a market that has so far been little explored.
In general, those premium products with a strong territorial identity will be advantaged, which today find obstacles mainly in high duties and bureaucratic barriers. However, the real leap in quality for the protection of Made in Italy will only come when the separate agreement on geographical indications is finalised.
In addition to the agri-food sector, the agreement also provides benefits for industrial and manufacturing products, including automobiles, machinery, chemicals and pharmaceuticals.
Opportunities and risks
The potential is enormous: with over 1.4 billion consumers, a growing middle class and an ever-increasing demand for quality products, India represents a very attractive market. For Italy, which exports wine to India for just 2.6 million euros, the prospect is to diversify markets and reduce dependence on large historical customers, such as Germany, the USA and the United Kingdom.
However, this type of agreement also raises many environmental and social questions. The increase in exports implies greater international transport, with a consequent increase in CO₂ emissions, and can fuel intensive production which risks being at the expense of sustainable agricultural practices.
However, it should be noted that the agreement includes a chapter dedicated to sustainable development, with commitments on environmental protection. It remains to be seen how these principles will be translated into practice and which control mechanisms will actually be implemented. The real challenge will be to ensure that commercial growth does not come at the expense of the environment and workers’ rights, transforming commitments on paper into concrete and verifiable actions.
For European companies, the EU-India agreement is however an unprecedented opportunity. But success will depend not only on cutting tariffs, but also on the ability to accompany companies into the Indian market, to adapt to local habits and to combine economic growth and sustainability.
