Next Round Of Talks To Start Monday Amid Trump Tariff Threats #IndiaFinance

In June 2022, India and the 27-nation EU bloc resumed the negotiations after a gap of over eight years. It stalled in 2013 due to differences over the level of opening up of the markets. The two sides are also negotiating an investment protection agreement and an agreement on Geographical Indications.

According to the think tank Global Trade Research Initiative, key sticking points include agricultural tariffs, especially on dairy and wine import duties, automobile tariffs, and regulatory barriers affecting labour-intensive goods.

India is reluctant to lower auto import duties and is cautious about committing to EU demands on sustainability and labour standards, it said, adding that services trade remains another contested area, with India seeking easier mobility for professionals and data security recognition under the EU’s GDPR framework (European Union’s General Data Protection Regulation).

“Government procurement, investment protection, and environmental regulations like the Carbon Border Adjustment Mechanism further complicate talks. Despite these challenges, a successful agreement could significantly enhance bilateral trade, which exceeded USD 190 billion in FY24,” GTRI Founder Ajay Srivastava said.

India exported $76 billion in goods and $30 billion in services to the EU, while the EU exported $61.5 billion in goods and $23 billion in services to India.

Agriculture remains a highly sensitive area in the negotiations, as the EU is pushing India to cut tariffs on cheese and skimmed milk powder, which India currently shields through high duties to protect its domestic dairy industry.

Srivastava also said that the EU’s complex tariff system for agriculture makes negotiations particularly challenging, as it applies Non-Ad Valorem tariffs on 915 agricultural tariff lines (or product categories), which significantly raise the effective duty rates on imported products.

“These high tariff structures, combined with stringent Sanitary and Phytosanitary measures and Technical Barriers to Trade, make it difficult for Indian agricultural exports to enter the European market. Even if tariffs are reduced, the EU’s regulatory framework remains a major hurdle for Indian farmers and food producers,” he added.

European winemakers are pushing for greater access to the Indian market, where imported wines currently face a 150% tariff.

The EU wants India to eliminate or significantly reduce these duties to 30-40% levels, he said, adding that India may like to match what it offered to Australia under the India-Australia Economic Cooperation and Trade Agreement, where tariffs on wines were slashed to 50% in 10 years.