New Delhi: European vintners are poised to gain a massive foothold in the Indian market as New Delhi prepares to slash its prohibitive 150% import duty on wines under a landmark bilateral free trade agreement finalised on Tuesday.

The deal, which concludes 18 years of negotiations that began in 2007, will see tariffs on premium European wines tumble to 20%. Mid-range labels will see duties reduced to 30%, though no concessions will be granted for bottles priced below 2.50 euros ($2.71).

The agreement is expected to be signed later this year and could take effect as early as 2027.

“Like auto, wine is one of the biggest exportable items for the Indian industry,” a senior official said. “And we have given duty concessions in a calibrated way. The duties will be reduced in seven years.”

The phased reduction follows a model India established in recent trade pacts with Australia and New Zealand. While European producers gain access to India's burgeoning middle class, Indian winemakers will receive duty-free access to the 27-nation bloc, aiming to serve the vast Indian diaspora in Europe.

Beyond the cellar, the "mother of all deals" includes major breakthroughs for Indian agriculture. India secured a duty-free quota for 85,000 tons of table grapes, valued at approximately $100 million, targeting a market where the EU currently spends $1.4 billion annually.

The spirits industry will also see a shakeup, with Indian tariffs on European whiskies, gin, and vodka, currently as high as 150%, falling to 40%. Beer duties will be cut from 110% to 50%.

Trade data from the 2024-25 fiscal year underscores the scale of the imbalance the pact seeks to address. India currently exports $1.4 million in wine and $24.5 million in other spirits to the EU, while importing $7.9 million in European wine and nearly $88 million in other alcoholic beverages.

Leaders from both sides described the pact as a strategic anchor that will help India and Europe navigate global economic volatility and reduce reliance on other major trade powers.

With inputs from PTI