European Commission President Ursula von der Leyen, center, arrives at a train station on the third anniversary of the Russian invasion of Ukraine, Kyiv, Ukraine, Monday, Feb. 24, 2025. Photo: AP European Commission President Ursula von der Leyen, center, arrives at a train station on the third anniversary of the Russian invasion of Ukraine, Kyiv, Ukraine, Monday, Feb. 24, 2025. Photo: AP The European Union is intensifying its efforts to negotiate a more favourable trade relationship with Indiahotchili, focusing on reducing tariffs on key products, including whiskey, wine, and cars.
This issue will be a key point of discussion as European Commission President Ursula von der Leyen and the EU’s College of Commissioners make their first-ever visit to India from February 27-28.
Trade and technology will dominate the agenda during this visit, with the EU and India seeking to finalise a Free Trade Agreement (FTA).
As per an Indian Express report, an EU official said that one of the primary obstacles to an FTA is the high tariffs that India imposes on European products. India's market is considered relatively closed, especially in sectors of commercial interest to the EU, such as automobiles, wines, and spirits.
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“There are a number of issues that are outstanding [for an FTA], including tariffs. India’s market is relatively closed, especially on key products of commercial interest to the European Union and to our member states’ industries. These include cars, as well as wines and spirits,fef777 casino” India Express quoted the official.
After nine rounds of negotiations, the EU and India are preparing for the tenth round of discussions scheduled for March 10-14 in Brussels. If concluded, the EU-India trade agreement will be the largest FTA for India, improving market access for industries like textiles, leather, and marine products. It is expected to significantly boost India's exports to its second-largest market after the United States.
For its part, India is advocating for greater concessions for its Micro, Small, and Medium Enterprises (MSMEs), particularly in light of the EU's proposed Carbon Border Adjustment Mechanism (CBAM). This mechanism, slated to be implemented next year, aims to impose a carbon tax on goods such as steel, aluminium, and cement that are considered carbon-intensive.
India has, however, expressed concerns that CBAM would disproportionately burden its industries, especially MSMEs, due to the embedded carbon in these products.
Times of India reported that India has been opposed to CBAM ever since it was conceived, arguing that the initiative will place an additional burden on businesses in developing economies. Micro, small and medium-sized businesses, including those in the steel and aluminium sectors, will be particularly impacted.
While some larger Indian companies are working on developing low-carbon manufacturing techniques to reduce their exposure to the CBAM levy, they face challenges in becoming competitive in the EU market, as these technologies will take time to implement.
The carbon border tax is expected to be a major point of contention during the upcoming discussions, with India planning to raise the issue at both the second ministerial meeting of the India-EU Trade and Technology Council and in bilateral talks between Prime Minister Narendra Modi and European Commission President von der Leyen.
The EU is also looking to address a range of other trade barriers, such as procurement commitments and non-tariff barriers, as part of the FTA negotiations. “We are seeking to drive a hard bargain to ensure that the FTA covers tariffs, non-tariff barriers, and procurement commitments,” said an EU official. “These are just three examples of areas where we still expect India to come up with stronger commitments.”
Textile exports are another area where India is hoping for improvements. Currently, Indian textiles face a 10 per cent duty on exports to the EU due to the absence of a trade agreement, putting Indian producers at a disadvantage compared to countries like Bangladesh and Vietnam. A potential EU-India FTA would level the playing field and help boost India’s textile sector.
The country is also seeking better access to the EU services sector, particularly for skilled labour mobility. The EU is one of India’s largest markets for services exports, and greater integration in this area would benefit both economies.
With Europe having the world’s largest network of trade agreements—covering 76 countries—India’s fewer existing trade deals have left it at a disadvantage. The EU sees this as an opportunity to strengthen its ties with India, which is also negotiating with the UK. However, both sides face the challenge of aligning their high expectations for the deal.
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“The EU has high expectations from the deal, and meeting somewhere in the middle is a challenge. We have an advantage in terms of the experience we have in negotiating these deals. We have a template. Therefore, we also have high expectations. We have standards, and I think part of the challenge for us is perhaps to meet somewhere in the middle, where our high ambition and high standard are indeed reciprocated and also reflective of Indian interests,” an EU official was quoted by Indian Express.
The issue of sanctions imposed on Russia will also likely be raised during the visit, with the EU seeking India's continued cooperation on enforcing these sanctions. Additionallyhotchili, de-risking from China is expected to be another key item on the India-EU agenda.