India to remove duties on import of passenger aircraft from the EU, may lead to lower airfares

India will remove duties on several goods, including passenger aircraft imported from the European Union (EU), as part of a recently concluded Free Trade Agreement (FTA). Commerce Ministry sources said that removing duties on passenger aircraft will lower operating costs for Indian airlines, which could eventually influence airfares, especially since such aircraft must be imported due to the absence of a domestic manufacturing ecosystem.

Sources noted that data adequacy was not part of the trade deal. India’s Data Protection Rules are still new, so any discussions on them can only begin once the full legal framework is in place. With no obligation on data exclusivity in the FTA, no amendments to legislation are required. Sectors excluded from the deal include wheat, rice, corn, maize, soya, GM products, pulses, and dairy, including cheese. Agricultural products opened for import at lower duties are primarily those where India is import-dependent, and even these are subject to Tariff Rate Quotas (TRQs).

For sectors facing duty relaxation on EU exports into India under the FTA, a five-year review mechanism has been included. Sources explained that prolonged protection can be counter-productive, potentially disadvantaging consumers, so a transition period allows sectors to prepare for competition.

The FTA also provides India terms of mobility for intra-corporate transferees and commitments for trainees, spouses, and dependents, similar to the UK’s FTA, subject to country-specific limitations. However, non-EU members like Turkiye may access Indian goods exported to the EU but cannot benefit directly from the India-EU FTA. Sources highlighted that a German company recently held its first-ever board meeting in India in over 100 years and has sought significant land near an Indian port to establish a chemical production zone, taking advantage of investment opportunities in India and the potential for exports at scale.

Sebastian Stiezel, President of the Berlin Chamber of Commerce (IHK Berlin), called the India-EU FTA “an important step towards opening up in an increasingly tense global situation,” adding that “India is no longer a future market but a market of the present, where Berlin should now seize the opportunities.” Other industry leaders, including Hildegard Mueller (President, German Association of the Automotive Industry), Bertram Brossardt (Managing Director, Association of Bavarian Businesses), Thomas Bürkle (President, Association of Entrepreneurs Baden-Württemberg), and Thilo Brodtmann (Managing Director, German Engineering Federation), welcomed the FTA for the business opportunities it creates. CEOs from major German carmakers such as Volkswagen, BMW, and Mercedes-Benz also praised the deal’s potential to boost exports and strengthen global supply chains.