India and the European Union concluded free-trade agreement negotiations on Jan. 27 at the 16th India-EU Summit in New Delhi, agreeing to eliminate the tariff on tea, even as a stricter EU limit on pesticide residue due next month threatens to shut out a large share of Assam's premium exports, according to STiR Coffee and Tea Magazine.

Before the deal, retail tea packs under 3 kilograms carried a duty of 3.2% to 6.4% entering the EU, flavored and specialty green teas up to 6%, and instant tea and extracts up to 10.2%, the trade publication reported. Bulk tea shipments already entered duty-free. Under the agreement, all of those categories move to zero. India's commerce and industry minister, Piyush Goyal, said the wider deal removes or cuts tariffs on more than 90% of goods traded between the two sides and that he expects it to take effect later in 2026, CNBC reported.

The relief on duty comes alongside a separate tightening on the food-safety side. The EU is lowering the maximum residue limit, the ceiling on pesticide traces permitted in food, for two crop chemicals, thiamethoxam and clothianidin, to 0.05 parts per million beginning in March, a stricter threshold than India's domestic standard, STiR reported. India exports roughly 19 million to 21 million kilograms of tea a year to EU countries, a fraction of its approximately 262 million kilograms in total annual tea exports, but Assam, which alone grows over half of India's tea, around 628 million kilograms in 2024, supplies much of the premium, high-end grade the EU market prizes. STiR reported industry estimates warning of a 60% to 70% contraction in those high-end exports if gardens cannot adjust in time.

"Our major EU markets have traditionally been Germany and Poland. The issues Indian teas face are not duty barriers but MRL compliance," Mohit Agarwal, a director at Asian Tea Company, said. The Tea Association of India separately flagged residue compliance, food safety, traceability, packaging, and labeling as the real hurdles the new tariff line does not touch, and called for science-based standards, according to the report.

Taken together, the two changes leave an Indian tea exporter facing a zero-duty gate into the EU but a residue test tighter than the one it clears at home, a swap of one barrier for another that a customs ledger alone will not show.

Sources: STiR Coffee and Tea Magazine, India-EU FTA: Tariff Relief for Tea but MRL Storm Clouds Gather; CNBC, India-EU trade deal: What does it do to tariffs and who benefits?.