Modi liberalises Indian tariffs much to chagrin of the left

After nearly two decades of intermittent negotiations that began in 2007, India and the European Union have concluded a landmark Free Trade Agreement (FTA). But potential ‘reform’ of tariffs is angering many of the left of Indian politics. Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, both announced the deal enthusiastically, with Modi saying:

Today is a day that will be remembered forever, marked indelibly in our shared history.

Von der Leyen framed the agreement as a historic achievement, stating in a pinned tweet:

Europe and India are making history today. We have concluded the mother of all deals.

The EU-India deal

The EU-India Free Trade Agreement commits both sides to sweeping tariff elimination, covering over 96% of India’s tariff lines and 99% of the EU’s — with the goal of expanding bilateral trade, which reached €120bn in 2024.

A key selling point to Europe, as outlined by the European Commission, is that the deal:

will help EU companies and farmers export more. Separately, the Commission underscored a specific gain for EU agriculture through a parallel pact on Geographical Indications (GIs), which aims to protect traditional EU products in the Indian market ‘by removing unfair competition in the form of imitations’.

Through the timing of the conclusion of the agreement, India and the EU are unmistakably sending a message to Washington. Its allies and partners will not give in to threats of tariff wars and weaponising trade, according to the geopolitical magazine The Diplomat.

The Diplomat further states there are some roadblocks before the operationalisation of the deal:

The EU-Mercosur agreement, concluded after 25 years of negotiations, just days before the India-EU FTA, is now facing opposition from the European Parliament. Unlike the Mercosur agreement, the India-EU FTA does not require approval by each of the 27 national member states, which could potentially speed up the operationalization of the agreement, but it would still need Parliamentary approval.

India’s left condemns Modi’s neoliberal deal

However, the core disputes that caused the breakdown of negotiations in 2013, under the then-ruling Congress party, have not been meaningfully resolved in the current pact. They have simply been papered over.

A key failure cited by the current opposition Congress is the Modi government’s inability to secure an exemption for India’s aluminium and steel sectors from the European Union’s Carbon Border Adjustment Mechanism. Jairam Ramesh, the Indian National Congress’s general secretary in-charge of communications, emphasised the material consequence of this on social media:

India’s aluminium and steel exports to the EU have already fallen from $7bn to $5bn and are only expected to fall further beginning this year due to the enforcement of the CBAM since 1 January, 2026.

The tweet from Ashok Swain, an Indian-origin academic based in Sweden, captures the tone of the Indian left’s opposition to the EU-India trade deal:

Thanks to the trade deal between EU and India, German cars and French wines will be cheaper in India – exactly what 800 million Indians surviving on subsidised food have been demanding.

Pros and cons of tariffs

Swain’s criticism mirrors the opposition from domestic left-leaning factions like the Communist Party of India (Marxist), which has argued that tariff cuts on luxury goods will only benefit the wealthy, while threatening the livelihoods of farmers, workers, and ordinary citizens.

The skepticism of the left stems from India’s economic history.

As Tricontinental Research notes, millions in India still rely on agriculture for their livelihood. The institute notes that in the 1990s, aggressive cuts to agricultural tariffs triggered a prolonged agrarian crisis. While farming now makes up just 18 percent of India’s GDP, it still employs 46 percent of the national workforce. In contrast, the service sector accounts for over half of the economy but only 30 percent of jobs.

The Samyukt Kisan Morcha, a coalition of over 500 Indian farmers’ unions, warns cheap, subsidised EU processed foods and wines will crash domestic prices and devastate small farmers. It condemns the “double standard” where complex EU barriers block Indian farm exports, while India lowers its own import standards.

Furthermore, left-wing critics warn the FTA’s facilitation of European weapons procurement from India risks empowering crony capitalists and derailing the country’s traditional nuclear policy, with the Diaspora in Action group and the Communist Party of India (Marxist) asserting it represents an “absence of guardrails” for peace and stability.

Featured image via the Canary