NEW DELHI – The European Union is set to urge India to lower its high tariffs on cars and wine in order to boost trade between the two nations. This move comes as the EU seeks to reduce its dependence on China and strengthen its partnership with India.
In a statement, a senior EU official said that the organization plans to push for a reduction in tariffs and increased market access for its products. The EU also hopes to expedite free trade agreement talks with India by offering flexibility on agriculture issues.
According to the official, the Indian market has been relatively closed to key products of interest to the EU, such as cars, wines, and spirits. This has posed a challenge for EU member states, whose industries have been affected by the high tariffs.
The call for lower tariffs coincides with US President Donald Trump’s recent threat to impose reciprocal tariffs, causing concern for Indian exporters. In fact, analysts estimate potential losses of approximately $7 billion annually due to these tariffs.
The EU is currently India’s largest trading partner in goods, with trade reaching nearly $126 billion in 2024. This marks a significant increase of about 90% over the past decade. However, in light of recent events, the EU is seeking to reduce its reliance on China and diversify its supply chains.
As part of its “de-risking” strategy, the EU aims to strengthen economic and security ties with India. This includes addressing security challenges such as cyber threats and tensions in the South China Sea and Indo-Pacific.
The EU sees India as a vital ally in these matters and is looking to further enhance cooperation. European Commission President Ursula von der Leyen, who will be visiting New Delhi for two days starting Thursday, is expected to discuss key areas for collaboration with Indian Prime Minister Narendra Modi and Trade Minister Piyush Goyal.
The visit also comes at a time of rising geopolitical tensions, making it even more significant. The EU and India are set to outline key areas for deeper cooperation under their strategic partnership.
In addition to security cooperation, the EU is also expected to seek India’s support for a “peaceful and just deal” for Ukraine’s security. The EU and India could also potentially sign an agreement to share classified security information to address common threats like cyber attacks and terrorism. This could also pave the way for exploring defense equipment trade between the two nations.
However, despite the potential benefits of this visit, trade analysts have expressed doubts about its tangible outcomes. According to Ajay Srivastava, founder of the Delhi-based think-tank Global Trade Initiative and India’s former negotiator on trade talks with the EU, the EU must acknowledge India as a data-secure country in order for significant cooperation to take place. He also points out that while both parties have concerns about China, it is not their top priority. India is currently focused on its border tensions with China, while the EU is more concerned with the Ukraine-Russia conflict and matters related to NATO.
Overall, the visit of President von der Leyen and other EU leaders to India highlights the importance of the EU-India partnership in the current global landscape. Both parties have much to gain from increased cooperation, but it will require compromise and flexibility on both sides to achieve tangible results. As the EU aims to reduce its reliance on China, India can provide a strategic and reliable partner. And as India continues to grow as a major economic power, the EU can offer valuable expertise and resources. Let us hope that this visit will pave the way for a stronger and more fruitful partnership between the EU and India in the years to come.
