A New Era for Coffee: The EU-India Free Trade Agreement

By: Fabricio Scocco

After nearly two decades of complex negotiations, we are witnessing a historic milestone. The European Union and India have reached a comprehensive free trade agreement that is set to reshape the landscape of international commerce. By removing up to 90% of tariffs between these two regions, we are opening doors to a combined market of over 2 billion people—an economic powerhouse representing 25% of the global GDP.

For those of us operating within the specialty coffee sector, this development is more than just a policy shift; it is a critical evolution for design-driven, sustainable brands.

  • Redefining the Coffee Supply Chain

The impact on coffee trade and packaging cannot be overstated. The reduction of tariffs on key imports creates a streamlined highway for goods:For India: Exporting green coffee, raw materials, and packaging into the EU will become significantly more efficient due to reduced barriers.For Europe: Companies sourcing or co-producing in India will now have access to smoother, more cost-effective trade lanes.Competitiveness: High-end roasted coffee and innovative packaging solutions will immediately become more competitive on the global stage.

  • Strategic Collaboration and Innovation

We are entering a pivotal moment for strategic partnerships. Consider the existing synergy between We Brand Coffee (INDIA) and Takumi Collective (Netherlands). This agreement validates and accelerates such collaborations where design, sourcing, and packaging flow across borders.

By reducing logistic complexity, we can focus on what truly matters: co-manufacturing opportunities and creating packaging solutions that meet rigorous EU standards while celebrating India’s vibrant specialty coffee scene.

  • Market Outlook and Buying Behavior

As the trade landscape shifts, we anticipate several key trends in buying behavior:Sustainability Focus: Indian packaging providers will likely see a surge in demand from EU brands that prioritize sustainable materials.Exploration of Origin: EU roasters and micro-brands can now explore Indian-origin coffee with significantly less financial risk.Creative Co-development: Branding agencies in both regions will find it easier to co-develop storytelling assets and packaging designs.

  • Navigating the Risks

While the momentum is high, we must remain pragmatic. The agreement still requires official ratification from the EU Parliament and Indian authorities. Furthermore, stakeholders must stay vigilant regarding:Currency and Geopolitics: Short-term cost-benefits may be influenced by FX-driven producer shifts and geopolitical changes.

Regulatory Alignment: Close monitoring of food safety, sustainability criteria, and packaging regulations is essential.Environmental Factors: Unfavorable weather during peak harvest remains a variable that could disrupt supply levels.

  • The Bottom Line

Despite these risks, our market confidence remains medium-to-high. There is a strong mutual interest in diversifying trade and moving away from US-centric dependencies.

This agreement is the foundation for a new phase of commercial and creative cooperation. For those of us building in the coffee world—from bean to brand—this is a unique opportunity to rethink how we work across borders.

Roasted and Soluble Coffee Exports Decline in July 2025

Dubai, September 6, 2025 (Qahwa World) – The International Coffee Organization’s (ICO) August 2025 report has revealed a significant decline in exports of both roasted and soluble coffee in July, underscoring new challenges facing the global coffee sector as it navigates volatile prices, shifting demand, and rising production costs. The data highlights not only pressure on green coffee but also on finished products that reach consumers directly, raising concerns about structural changes in the industry.

According to the report, roasted coffee exports fell by a dramatic 63%, reaching only 30,000 bags compared to 81,000 bags in July 2024. This steep contraction marks one of the sharpest drops in recent years for a category that reflects direct consumer demand for value-added coffee products. Soluble coffee exports also registered a decline, albeit more modest, down 5% to 1.08 million bags from 1.13 million bags a year earlier. While less severe, the slowdown in soluble exports is significant because this category has long been considered one of the most resilient and widely consumed segments in global markets, particularly in emerging economies.

Analysts attribute the decline in roasted coffee exports to several interlinked factors. The most immediate is the surge in global coffee prices, with the ICO Composite Indicator Price (I-CIP) climbing by 14.6% in August to 297.05 US cents per pound, its highest level since 2024. Such historic price levels have curbed demand for high-cost roasted products, especially in advanced markets such as Europe and North America, where consumers are already grappling with inflation and higher living expenses. At the same time, exporters face mounting challenges from rising production and shipping costs. Energy, labor, and logistics expenses have all increased in recent months, eroding margins and forcing some companies to scale back international shipments in favor of local markets where conditions are more stable.

For soluble coffee, the 5% drop highlights a different dynamic. Traditionally, this segment has thrived in developing and price-sensitive markets due to its affordability and convenience. Yet even here, demand appears to be shifting. In mature markets, growth has slowed as consumers gravitate toward specialty coffee and fresh roasted options, reflecting a broader trend toward quality and experience rather than convenience alone. In competitive producing countries such as Vietnam and India, rising production capacity has intensified rivalry, putting pressure on exporters to maintain prices and market share. Younger generations in many countries are also seeking more diverse coffee experiences, leading to gradual erosion in the dominance of instant coffee.

The decline in both roasted and soluble exports has broader economic implications. It signals that pressure in the coffee sector is not limited to green coffee or raw supply but extends throughout the value chain. Combined with the ICO’s data showing global coffee stocks at their lowest level since April 2024, the contraction in finished product exports adds another layer of vulnerability to a market already characterized by price volatility and supply uncertainty. Experts warn that if these trends persist, the industry could face an extended period of turbulence, with higher prices for consumers and tighter margins for producers.

Still, opportunities remain in certain regions. Demand for soluble coffee continues to expand in parts of Africa and Asia, albeit at a slower pace, offering some relief for exporters. However, regulatory challenges such as the upcoming EU Deforestation Regulation (EUDR), set to take effect at the end of 2025, are expected to add new hurdles for suppliers attempting to maintain access to key European markets. For roasted coffee, niche segments such as specialty blends and locally branded products may offer pathways to sustain growth, but producers will need to adapt quickly to changing consumer preferences.

The ICO emphasized that roasted and soluble coffee exports should be monitored closely as indicators of global consumption trends. If the declines seen in July extend over the coming months, it could mark the beginning of a deeper shift in how coffee is traded and consumed worldwide. In that scenario, volume alone would no longer be the main metric of success; value-added innovation, consumer engagement, and adaptability to regulatory and market changes would become critical to survival. For now, the combined 63% plunge in roasted coffee exports and the 5% drop in soluble shipments serve as a stark reminder that the challenges facing the coffee sector go beyond farms and warehouses and reach all the way to the consumer’s cup.

India Cuts GST on Coffee to 5% in Landmark Tax Overhaul

New Delhi, September 4, 2025 (Qahwa World) – The Indian government has announced a sweeping reform of its Goods and Services Tax (GST), slashing rates on coffee and other food products from 12%–18% down to just 5%. The decision, taken during the 56th GST Council meeting chaired by Finance Minister Nirmala Sitharaman, marks one of the most significant tax changes since the GST system was introduced in 2017.

The reform simplifies India’s indirect tax structure into two main slabs—5% for essential and merit goods, and 18% as the standard rate—alongside a new 40% rate for de-merit goods such as tobacco and luxury items. The reduced rates, including the cut on coffee, will take effect from September 22, 2025, coinciding with the Navratri festival.

Coffee Industry Among Key Beneficiaries

Coffee has been placed in the merit category, meaning products that previously attracted 12% or 18% GST—such as roasted beans, instant coffee, and other processed coffee items—will now be taxed at only 5%.

Industry experts expect this move to have a ripple effect across the entire coffee value chain:

  • Growers and processors are likely to benefit from stronger domestic demand, as lower retail prices could encourage greater consumption.

  • Retailers and cafés may see a boost in sales volumes, with increased affordability improving consumer access to both mainstream and specialty coffee.

  • Consumers will directly benefit from reduced prices, especially as food and beverage costs have risen sharply in recent years.

A Broader Economic Push

The decision is part of a wider strategy aimed at easing the cost of living, stimulating consumption, and simplifying India’s tax regime. Alongside coffee, the rate cut covers other everyday items including chocolates, butter, ghee, sauces, noodles, and packaged snacks.

“This rationalisation is designed to make GST simpler, more transparent, and more consumer-friendly,” Finance Minister Sitharaman said after the council meeting, stressing that the two-slab system will also reduce compliance burdens for businesses.

Looking Ahead

India—already one of the world’s largest producers of Arabica and Robusta—is expected to see a surge in domestic coffee consumption following the tax cut. Analysts suggest the move could help narrow the cultural gap between tea and coffee, while further boosting India’s vibrant café culture and specialty coffee sector.

The GST overhaul signals a structural shift in India’s economic policy, and for coffee, it may represent the beginning of a new chapter where affordability fuels greater appreciation of the drink across the country.

The History of Coffee in India: What We Know?

The website of ‘DRWakefield’ has recently released a comprehensive report detailing the history of coffee in India. This report contains a wealth of significant information, tracing the journey of coffee from Ethiopia and Yemen to India.

‘QahwaWorld’ is pleased to announce the re-publication of this report in its entirety, even though there may be some differences in specific details. We aim to present the content as it is, respecting the original information provided by ‘DRWakefield’.”

While researching for this article, I stumbled upon Edmund C. P Hull’s book from 1865 “Coffee Planting in Southern India and Ceylon”. I noticed that he lived in Madras (modern-day Chennai) and the book was published by the Gantz brothers based out of Mount road, known as one of the most important roads of Chennai dating over 400 years old. These journals on coffee were sent back to London. I was born and raised in Chennai and lived a 6-minute drive from Mount Road. Today, I am writing this article only 15 minutes from where these journals were posted to in Charring Cross, from the DRWakefield London Office.

India, a land of diverse cultures and traditions has a rich history of coffee cultivation and consumption. This journey takes us through the origins influences, and dynamic evolution of the coffee culture in India, exploring the mystical tales of Baba Budan, the colonial imprints of the Dutch and the British, and the pulse of the 3rd wave coffee movement.

The Seven Seeds

The historical roots of coffee trace back to Africa, and its journey subsequently led it to the Arabian peninsula. Yemen emerged as a coffee cultivation powerhouse, exporting exclusively roasted coffee from the port of Al-Makha. Meanwhile, ancient India was renowned for its spice trade, a highly sought-after commodity globally. Arab traders, drawn to India in pursuit of these spices, introduced roasted coffee to the region. Coffee quickly captivated the elite circles of the subcontinent, sparking a surge in demand that far exceeded the supply.

The first actual mention of coffee being consumed comes from the work of Reverend Edward Terry in the court of Emperor Jahangir, in 1616. He was the chaplain to Sir Thomas Roe, ambassador of the King of England, at Jahangir’s court. He writes

“Many of the people there, who are strict in their religion, drink no at all; but they use a liqour more wholesome than pleasant, they call coffee; made by a black seed boyld in water, which turns it almost into the same colour, but doth very little alter the taste of the water: notwithstanding it is very good to help digestion, to quicken the spirits, and to cleanse the blood.”

MUGHAL EMPEREOR, JAHANGIR, IS BEING SERVED FOOD AND DRINK BY HIS TWO SONS KHUSRAU AND PARVIZ. MUGHAL DYNASTY, INDIA (1610)

Knowing that there was a demand for coffee and that it was well appreciated within India, it was only a matter of time before it would grow locally. Enter the legend,(of) Baba Budan, a Sufi saint who, in the 17th century, carried seven coffee seeds from Yemen in his beard whilst returning from a pilgrimage. Planted in the hills of Chikmagalur (Western Ghats), these seeds marked the inception of coffee cultivation on Indian soil, a move that would shape the country’s history. The hills are now referred to as the Baba Budangiri Hills and a shrine has been built there in his honour.

THE HILLS OF BABA BUDAN GIRI

Birth of Plantations

Now that we know how coffee arrived in India, let’s look into how cultivation grew. In 1650, Pieter van den Broecke, working for the Dutch East India Trading Company, visited Mocha in Yemen and tasted something “Hot and Black”. He was the first Dutch merchant to taste coffee. He also decided to steal the coffee seeds and take them back to Amsterdam. As the climate in the Netherlands wasn’t suitable for cultivation, in 1658, the Dutch shipped the coffee east to Ceylon (Sri Lanka) and later Southern India. The Dutch were among the earliest European colonial powers involved in the Indian coffee trade during the 17th century, later abandoning this cultivation to focus on their Javanese plantations to avoid lowering the price by oversupply.

The British East India Company, later in the 18th century, played a crucial role in shaping the coffee industry in India. The coffee plant gained popularity in regions like Karnataka, where British planters started large-scale cultivation. Over time, the British promoted coffee cultivation in the Nilgiri Hills and Wayanad, contributing to the diversification of coffee-growing regions in India.

Not long ago the British Museum held an exhibition on the history of coffee. I came across some of DRWakefields coffee sacks but also a beautiful painting of the coffee plant that was part of a botanical album compiled in Calcutta, recorded by William Roxburgh, the Superintendent of the Calcutta Botanical Garden (18th Century). British botanists ventured into the hills of the western ghats to investigate and research coffee plants and their behaviour. In fact, the very oldest plant specimens at Kew were gathered in India in 1696.

Whilst the British grew and shipped coffee from India, around the Cape of Good Hope to Northern Europe, at certain times of year the coffee would change. This was not a short journey and would take around 6 months; in the monsoon season, this was ample time for the beans to absorb the additional moisture, swelling and changing character into what we now call Monsoon Malaabar coffee.

Shipping gradually improved, times reduced, but the flavour was still desirable, and so the understanding of what caused these changes were adapted to replicate the monsooning in large open-sided warehouses on land over the hulls of wooden ships. These days coffee is exposed over a period of 3-6 months on the west coast of India, which occurs between June/July and September.

Modern Coffee Cultivation 

Although India primarily cultivated Arabica coffee, widespread infestations of coffee leaf rust to India from Sri Lanka compromised 30% – 50% of the crop. Robusta plants were discovered to be more tolerant to the humidity and resistant to diseases like rust. They also found that not only were the beans larger in size but also cheaper to grow. Over time, the majority of the coffee cultivated in India shifted towards Robusta. Learn more about the birth of robusta in our article here.

Today, both Arabica and Robusta are cultivated in India, with over 70% of the national production reserved for exports. Coffee is now largely cultivated in Southern India primarily in Karnataka, Kerala, Tamil Nadu and Andhra Pradesh. The non-traditional areas popularly known as the “Seven Sister States of India” comprising the states of Assam, Manipur, Meghalaya, Mizoram, Tripura, Nagaland and Arunachal Pradesh of Northeastern India also grow smaller amounts of coffee, mainly contributing to the local market.

COFFEE GROWING REGIONS OF INDIA

Shade-Grown and Sustainable Coffee

Although shade-grown coffee practices are not exclusive to India, most of the coffee produced in India is shade-grown under a canopy of evergreen and leguminous trees. When Guus visited India back in 2020 (Trip Report), he was pleasantly surprised by the vast amounts of shade everywhere. He said, “Big silver oaks, jackfruit, soapnut, sacred fig, matti and many other jungle wood species hung over the plantations, creating the feeling of being in a forest”. Less direct sunlight brings down the crop size but increases the quality by slowing down the ripening process and giving sugars more time to develop.

ARCHULEY ESTATE

Many coffee farms in India incorporate a variety of fruits and spices into their cultivation practices. This polyculture approach originated from the realisation that solely depending on coffee might not provide sufficient economic support for the land, given the unpredictable nature of global coffee prices. It is now common to see cardamom, nutmeg, cloves, oranges and tangerines, and pepper vines growing alongside the estate’s coffee plants. Coffee here is also handpicked without any machinery to ensure only fully ripe beans are harvested, often with multiple rounds of selective picking. Indian coffee is also sun dried on patios often lined with brick, stones, or concrete. Many estates will also use raised beds for the initial stages.

The increasing variety of overhead shade trees provide a sanctuary for birds and enhance the quality of natural organic matter introduced to the soil from falling leaves. This decomposed organic matter enriches the soil, conserves moisture, and reduces the need for chemical fertilizers. Shade trees also control the growth of weeds on the estates and reduce the incidence of insects, pests, and leaf disease.

 

Shade coffee also plays an important role in India’s wildlife. The Western Ghats are globally recognised as one of the 36 biodiversity hotspots of the world that runs over 1500km long. Although the area accounts for less than 6 percent of the national land area, it contains more than 30 percent of all plant, fish, bird and mammal species found in the country. Atleast 325 globally threatened species can be found in the Western Ghats. Over a third of the region’s plant species are endemic and BirdLife International has designated it ‘Western Ghats Endemic Bird Area’, as it has 16 restricted-range species confined to this region. The Nilgiri Flycatcher is one such threatened species endemic to the region, but is one of the many birds that is often found only in shaded coffee plantations and this is crucial for its conservation.

NILGIRI FLYCATCHER BY N.A. NASEER

South Indian Filter Kaapi

Tea and Coffee are widely available in India and often served in every household across the country. That said, this is not the tea and coffee that you might be familiar with. Although coffee is consumed around the world, it means different things in different cultures. In India, a cup of coffee now denotes hot milk and sugar mixed with a concoction brewed through percolation of finely ground coffee powder, often containing between 20-49% Chicory which counteracts the bitterness and balances it with its own sweet and woody flavours. This drink is known as South Indian Filter Kaapi. If you are interested in brewing this, check out this video [7]. Despite refraining from sugar and being lactose intolerant, this is by far my favourite way to drink coffee.

FILTER KAAPI SERVED IN STEEL TUMBLER AND DAVARA

3rd Wave Coffee Movement 

Our world has seen coffee trends come and go but in the last few decades, we have seen a period of growth and evolution for the global coffee industry. Though the traditional Filter Kaapi has been very popular, there is a shift towards specialty coffee in India. You might already be familiar with the 3 waves of coffee, and those waves are ripping on the coastline.

Over the last two decades, India saw a surge in the growth of large corporations setting up coffee shops which one could relate to the second wave. India’s very own Cafe Coffee Day, commonly known as CCD, had a revolutionary impact on Indian coffee culture. Founded in 1996, by 2016 they had over 2000 cafes across 220 cities. Unfortunately, poor financial management led to its downfall.

Enter Starbucks. In 2011, Starbucks and Tata Coffee announced plans to begin opening Starbucks in India through a 50:50 joint venture. As of 2023, they now have over 333 cafes around India. This is one of the few cafes in India offering coffee from a variety of origins. Cafe chains are now growing quicker than ever with Costa Coffee, Pret a Manger, Tim Hortons and more opening throughout the country.

GROWTH OF STARBUCKS IN INDIA

The first speciality cafe that I had been to was in fact called ‘Third Wave Coffee’ back in 2017, and at the time that was their only cafe. 6 years later, they now have over 100 cafes and are aiming for 300 in the near future. In 2020, I was back home in Chennai because of the infamous Covid-19. I read that the first speciality cafe was opening in my city and I immediately applied to work with them. I have slowly noticed that now there are more specialty cafes than I can keep count of within just 4 years. The covid effect has been seen across various industries, as visiting cafes wasn’t an option anymore, and Indians needed to purchase brewing equipment nearly tripling the number of home brewers. Coffee drinkers started to explore how people are beginning to understand how coffee is grown, processed and sourced.

India, despite ranking 6th in global coffee exports, faces unique domestic challenges. If you went into a local speciality cafe looking for a chocolatey Brazil or a berry-like Kenyan (as I’ve tried), you are not likely to find it. Importing green coffee bears a Basic Customs Duty (BCD) of 100%, accompanied by a 10% Social Welfare Surcharge (SWS) within India. Consequently, this hefty tariff structure discourages local roasters from actively seeking out imported coffee, limiting consumers with little choice of Origin.

While of course there are challenges, such as infrastructure limitations, quality control and market education, the trajectory of the specialty coffee industry in India points towards a bright future with a dynamic and ever-evolving landscape.

At DRWakefield, we have an amazing selection of coffees from India. This year, we will be looking at sourcing the Gems of Araku again. We have been in partnership with Gems of Araku since 2012 and have always been supportive of them, promoting their different coffee profiles coming from different tribes, villages, and districts in the beautiful Araku Valley, Andhra Pradesh. Keep an eye out for these delicious micro-lots!