The European Union plans to encourage India to reduce its high tariffs on cars and wine to enhance trade, as it aims to lessen its reliance on China. A senior official from the bloc made this statement ahead of the European Commission president’s visit to New Delhi.
The official echoed U.S. President Donald Trump’s threat of reciprocal tariffs, stating that the EU would urge India to lower tariffs on specific goods and broaden market access for its products. In return, the EU would offer flexibility on agricultural issues to expedite discussions for a free trade agreement.
“The Indian market is relatively closed, especially to key products of commercial interest to the European Union and our member states’ industries, including cars, wines and spirits,” said the official, who requested anonymity due to the confidential nature of their discussions.
EC President Ursula von der Leyen will visit India for two days starting Thursday, accompanied by leaders of EU member nations. This visit coincides with rising geopolitical tensions, as Brussels and New Delhi are set to define key areas for deeper cooperation under their strategic partnership.
Leyen is scheduled to meet Indian Prime Minister Narendra Modi on Friday, followed by talks with trade minister Piyush Goyal.
The next round of trade negotiations is planned for March 10-14 in Brussels.
The EU’s call for lower tariffs arises amid Trump’s threats to impose reciprocal tariffs starting in early April, which has created anxiety for India’s exporters. Analysts from Citi Research estimate that India could face potential losses of about $7 billion annually.
The EU serves as India’s largest trading partner in goods, with trade expected to approach $126 billion in 2024. This figure represents a 90% increase over the past decade.
DECREASING DEPENDENCE ON CHINA
As part of its “de-risking” strategy, the EU seeks to strengthen economic and security ties with India, diversify supply chains, and reduce dependence on key products from China.
The EU also regards India as a crucial ally in addressing security challenges, including cyber threats and tensions in the South China Sea and the Indo-Pacific region.
Leyen is anticipated to seek India’s backing for a “peaceful and just deal” concerning Ukraine’s security.
Additionally, the EU and India may sign an agreement for sharing classified security information to combat common threats like cyber attacks and terrorism, while exploring defense equipment trade.
Despite these potential advantages, trade analysts suggest that the visit may not produce significant outcomes.
For meaningful cooperation, the EU needs to recognize India as a data-secure country.
Ajay Srivastava, founder of the Delhi-based think-tank Global Trade Initiative and a former negotiator for India’s trade talks with the EU, commented, “While both parties have concerns about China, neither sees it as a top priority.” He added that India focuses on border tensions with China, while the EU is more concerned about the Ukraine-Russia conflict and NATO-related issues.
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