The European Union is pushing for reduced tariffs on key exports such as whiskey, wine, and automobiles as part of its ongoing negotiations for a Free Trade Agreement (FTA) with India. This issue is expected to be a major point of discussion for the 27-member bloc as it works toward finalising the deal, according to a report by Business Standard. According to EU officials, trade and technology will be central themes during the upcoming visit of the European Commission’s College of Commissioners to India, led by President Ursula von der Leyen on February 27-28.

       News reports quoted officials saying that there are several unresolved aspects of the FTA, particularly concerning tariffs. India maintains a relatively protected market, especially for products of significant commercial interest to the European Union and its member states’ industries. These include automobiles, wines, and spirits.

       The official emphasised that the EU aims to secure a comprehensive and commercially meaningful trade agreement, addressing issues such as tariffs, non-tariff barriers, and procurement policies. These are just some areas where we anticipate stronger commitments from India, said an official.

       The EU’s demand for lower tariffs follows nine rounds of negotiations between the two sides, with the tenth round scheduled for March 10-14 in Brussels. If finalised, this agreement would represent India’s most significant FTA, offering improved market access for labour-intensive industries like textiles, leather, and marine products in the EU, which is India’s second-largest export destination after the US.

       India, meanwhile, is advocating for provisions that support its micro, small, and medium enterprises (MSMEs), particularly in light of concerns regarding the EU’s Carbon Border Adjustment Mechanism (CBAM), which could impose higher duties on Indian steel and aluminum exports. The EU recently granted trade concessions to the Mercosur bloc under an agreement finalised last year.

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       Indian textile exports currently face a competitive disadvantage compared to countries like Bangladesh and Vietnam due to an additional 10 per cent tariff in the absence of a trade agreement. An FTA with the EU would help level the playing field for Indian textile manufacturers.

       Beyond trade in goods, India is also seeking greater access to the EU’s services sector and enhanced opportunities for skilled labour mobility. The EU is not only a major market for Indian goods but also a significant destination for its services exports, the news report said.

       In May 2021, leaders from both sides agreed to revive negotiations for a “balanced, ambitious, comprehensive, and mutually beneficial” trade agreement after talks had stalled nearly a decade earlier. They also committed to separate negotiations on an investment protection agreement and an agreement on geographical indications (GIs), while working to resolve longstanding market access challenges.

       High expectations, challenges

       An EU official acknowledged that reaching common ground in the FTA negotiations remains a challenge. The report quoted the official as saying that the challenge is to find a middle ground where our ambitions align with India’s interests.

       With the world’s most extensive trade agreement network covering 76 countries, the EU is a key player in global trade. India, by contrast, has fewer FTAs but is currently in negotiations with both the EU and the United Kingdom.

       Focus on sanctions and China

       The EU delegation is also expected to discuss sanctions imposed on Russia and broader geopolitical concerns. The official highlighted that de-risking from China remains a priority in EU-India relations.

       The official said that one key issue the European Commission President is likely to address is not just our ongoing support for Ukraine but also the enforcement of sanctions on Russia.

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