Rhenus positive on EU-India trade deal

Logistics and forwarding firm Rhenus is hoping it will be able to capitalise on the free trade agreement recently announced by India and the European Union (EU).

The deal is expected to double EU goods exports to India by 2032 by eliminating or reducing tariffs on 96.6% of EU exports to India by value.

For example, India’s tariffs on EU-origin cars will gradually be reduced from 110% to as low as 10%, while they will be fully abolished for car parts after five to 10 years.

Tariffs ranging up to 44% on machinery, 22% on chemicals and 11% on pharmaceuticals will also be mostly eliminated. The agreement also removes or reduces many tariffs on EU exports of agri-food products.

For example, Indian tariffs on wines will be cut from 150% to 75% at entry into force and eventually to levels as low as 20%, tariffs on olive oil will go down from 45% to 0% over five years, while processed agricultural products such as bread and confectionery will see tariffs of up to 50% eliminated.

In the opposite direction, the EU will reduce or eliminate tariffs on 99.5% of Indian exports by value, including the elimination of duties on Indian textiles, footwear, tea and coffee, and other labour-intensive goods such as leather, sports goods, toys, gems and jewellery.

Rhenus Group chief executive Tobias Bartz welcomed the development for the increased trade and predictability it would bring, allowing companies to invest with certainty.

“Expected annual savings of around €4bn per year and the prospect of significantly higher trade volumes underline the economic relevance of this agreement.

"Again, it has become clear that it is not protectionism but global connectivity and targeted partnerships that drive economic growth and ensure long‑term prosperity. For globally operating companies, this new agreement primarily means more reliable framework conditions and improved predictability across supply chains.”

Bartz added that India is playing an increasingly important role in global supply chains.

“The focus now is on using this political framework, investing decisively, and driving growth in India and globally – for us at Rhenus, India has long been an important growth market and strategic focus.”

Work to be done

Consultancy Transport Intelligence practice leader Thomas Cullen said work still needed to be completed on some elements of the agreement, but added that the items included in the trade deal would help drive cargo volumes between India and the EU.

"At present, Bangladesh is a more important source of clothing exports than India, not least as Bangladesh faces lower tariffs for its clothing products exported into the EU," he said.

"If India will now have zero-tariffs for trade in clothing products into the EU, this could prove a significant stimulant to exports."

Cullen added that European vehicle manufacturers may also be hopeful of establishing both an export trade and a production presence in India.

"However, at present, the Japanese and South Korean manufacturers have a strong presence in India, which German and French vehicle manufacturers might struggle to rival, other than for the most expensive products."

"The prospects for increased trade between India and the European Union are good. Many economies in the EU are looking to diversify both their supply chains and their markets.

"India offers potential for this. Yet, for all the progress that India has made over the past decade, manufacturing still only accounts for around 14-15% of economic output. It remains markedly different for the economies of South East Asia and, certainly, of China.

"Perhaps this implies that India will see continued growth in industrial and merchandise output. If this is to be so, it will require continued investment in logistics infrastructure and services."