European Union and India Sign Landmark Free Trade Deal Covering Two Billion People

The European Union and India have finalized a free trade agreement that will create one of the world’s largest economic zones, covering two billion people and accounting for about 25% of global gross domestic product. The deal, announced in New Delhi after 18 years of negotiations, is being described by both sides as a historic turning point. European Commission President Ursula von der Leyen called it “the mother of all deals,” while Indian Prime Minister Narendra Modi said it would open a new era for both economies.

The agreement eliminates tariffs on 90% of traded goods between the EU’s 27 member states and India, the world’s most populous country. It also includes separate treaties on investment protection and geographical indications, which will safeguard products like champagne, feta cheese, Darjeeling tea, and basmati rice. Sensitive agricultural products such as dairy and cereals were excluded from the deal.

A key feature is the reduction of tariffs on European wine exports to India. For decades, India’s wine market was protected by a 150% basic customs duty on imports. Under the new agreement, tariffs on high-end wines (priced above €10) will fall to 20%, while mid-range wines (€2.5–€10) will see duties drop to 30%. These reductions will be phased in over seven years. This change is expected to reshape the competitive landscape for wine in India, where domestic producers currently control 60–70% of the market.

India’s wine sector is entering what analysts call a “Golden Decade.” The market is projected to grow at a compound annual rate between 14.7% and 17.41% through 2033, driven by a young population—600 million people are above the legal drinking age—and rising urbanization. Women now make up more than 30% of wine consumers in major cities, and there is a growing trend toward premium products.

Domestic producers like Sula Vineyards, Fratelli Vineyards, and Grover Zampa Vineyards dominate the local market. Sula has shifted its focus from economy wines to premium brands, which now account for more than 80% of its portfolio. Wine tourism is also growing rapidly at Sula’s Nashik facilities. Fratelli has expanded its presence in the premium segment and recently completed a public listing through a share swap. Grover Zampa is investing in modernization and expanding into northern India.

Red wine leads consumption with a 49% market share, favored for its compatibility with spicy Indian cuisine. White wines hold about 13–15%, with consumers shifting from sweet Chenin Blanc to drier Sauvignon Blanc styles. Sparkling wines are gaining popularity due to changes in wedding culture and aggressive marketing by international brands like Chandon. Rosé is the fastest-growing segment, especially in coastal cities such as Mumbai and Goa.

Imports have historically been a luxury niche but are now growing quickly due to trade liberalization. Australia currently leads among importers thanks to its own free trade agreement with India, capturing up to 44% of import volume. France follows with about 15–20%, dominating luxury hotels and champagne sales. Italy holds around 10–14%, driven by Prosecco and Italian cuisine trends. The United States has seen a 32% increase in value for Californian wines but remains a smaller player.

The EU-India deal aims to encourage €100 billion in European investment in India over the next 15 years and triple the presence of European companies there. However, challenges remain for both domestic and foreign players. Alcohol regulation varies widely across India’s 36 states and territories, each with its own excise rules and distribution laws. Some states promote wine production while others enforce prohibition. The tropical climate requires an unbroken cold chain for imported wines; logistical failures can compromise quality before bottles reach consumers.

Indian buyers are highly price-sensitive, so even small increases in retail prices can push them back toward local spirits or beer. As tariffs fall under the new agreement, competition will intensify in the INR 1,500–2,500 ($18–$30) price range where premium Indian wines and discounted imports will compete directly.

The next five years are expected to be critical as global wine producers seek to establish distribution networks in India’s complex market. Success will depend on consumer education and building strong relationships with hotels, restaurants, and catering businesses—the so-called HORECA channel.

For Europe, this agreement offers access to one of the world’s fastest-growing wine markets at a time when consumption is stagnating at home. For India, it marks an end to decades of protectionism and signals its arrival as a major player in global trade for food and beverages. Both sides hope that this partnership will reduce their strategic dependence on China while opening new opportunities for business growth and cultural exchange.