‘Mother of All Deals’ to uncork big gains for alcobev industry

The European Union and India have sealed a landmark Free Trade Agreement (FTA) after nearly two decades of negotiations, slashing steep tariffs on key European exports such as cars, machinery, wine and spirits.

Amid a turbulent year for global trade and as Brussels looks to diversify its trading partners, the bloc has secured a deal with the world’s most populous country, home to 1.45 billion people, and one of the fastest-growing major economies, with a GDP of €3.5 trillion.

European Commission President Ursula von der Leyen has dubbed the agreement “the mother of all deals,” with Brussels persuading one of the world’s most protectionist economies to lower duties across a wide range of products. The Commission described it as the “most ambitious trade opening that India has ever granted to a trade partner.”

Under the agreement, tariffs on wine will fall from 150% to 75% when the deal enters into force, before being phased down to 20% over several years. Duties on spirits will be cut to 40%, while beer tariffs will drop to 50% from 110%.

Overall, tariffs on nearly 97% of European exports to India will be slashed or eliminated, resulting in annual duty savings of up to €4 billion ($4.75 billion), according to the 27-nation bloc.

India’s appetite for wine is growing, but high tariffs have long kept European bottles off store shelves. A free trade agreement, with a signing ceremony penciled in for next week, could slash those duties. India may currently be a small market for wine exports, but “don’t forget it is the highest populated country in the world, with an increasing middle class,” said José Luis Benítez, director general at the Spain Wine Federation (FEV).

Wine consumption in the EU has declined from nearly 30 litres per person in 2005 to an estimated 20.6 litres in 2024, according to Eurostat. In contrast, wine consumption in India remains below one litre per capita, leaving significant room for growth.

That leaves plenty of room for growth, says Nicola Tinelli, head of institutional affairs at the UIV Italian wine and spirits association. “From 2019 to 2023, the ... trade of wine in general to India has increased around 12 percent a year,” he said in an interview, adding that the vast majority of wine consumed in India is domestic.

Italy was the largest European exporter of wine to India last year, followed by France and Spain. Even so, India accounted for just about 0.5% of the EU’s total wine export volume in 2025.

The deal also includes a bilateral safeguard mechanism, allowing for a “targeted response in the unlikely event of market disruption arising directly from the deal,” the Commission added. The mechanism would temporarily suspend trade concessions if they negatively affect producers in India or the EU.

Ignacio Sánchez Recarte, secretary general of the European Committee of Wine Companies (CEEV), said he hopes tariffs can eventually be reduced to around 20% for wines priced above €2.50. Currently, the EU exports mostly very cheap or very expensive wines to India to offset high duties.

Medium-priced wines, the bulk of EU exports, stand to benefit the most. Italy, the world’s largest producer of sparkling wine, could gain significantly, as nearly 47% of wine consumed in India is sparkling, according to UIV data. Demand for sparkling wine is forecast to grow four times faster than still wine through 2028.

However, domestic producers remain wary. “If duties come crashing down, our market could be flooded,” said Indian sparkling winemaker Ashwin Rodrigues. “It could spell a death knell for our industry.”

While European winemakers see both opportunity and risk, EU spirits producers have the most to gain. “If you look at alcoholic beverage consumption in India by type of beverage, spirits is the majority by far,” said Pauline Bastidion, director of trade at Spirits Europe. “There’s more consumption of spirits by volume than even beer.”

European spirits makers already export to India despite high tariffs, with several maintaining local production facilities. Indian whisky producers, meanwhile, could gain improved access to European markets, Bastidion noted.

“Until the agreement is announced, you never know what could happen. We are extremely cautious,” Bastidion said.