As ‘reciprocal’ becomes the norm, EU may go beyond whiskey, wine in its push for lower tariffs

India EU trade agreement could be more demanding for India on duty reduction

India has better terms of trade with the European Union than some of the competing economies like China and Indonesia, a Moneycontrol analysis has found.

European Commission president Ursula von der Leyen is leading a 27-member EU delegation on a two-day India visit, which began February 27, and trade will figure prominently in its talks with the Indian side.

Ahead of the visit, reports said EU is seeking lower tariffs on wines, auto and whiskeys, as the two sides negotiate a free trade agreement.

India has pushed back on issues such as Carbon Border Adjustment Mechanism (CBAM) and EU Deforestation Regulation (EUDR) are expected to hurt Indian industry, especially iron and steel.

CBAM and EUDR are green regulations that impose higher charges on goods that do not comply with the 27-member bloc's emission norms.

Analysis shows that issues may extend beyond wine, whiskies and cars, as countries look for more reciprocity in trading relations.

India seems to be better placed than Indonesia and China when it comes to imports to the EU.

While 96 percent of Indian imports to the EU attract less than 10 percent tariff, 94.3 percent of Indonesian imports and 92 percent of Chinese products are taxed at 10 percent or less.

India levies higher tariffs on goods from EU countries. Just 72.8 percent of EU imports have 10 percent or less tariff, for China, it is 85.8 percent and Indonesia 83 percent.

Vietnam, which signed a free trade agreement with the EU in 2019, is better placed, as 99.7 percent of its imports to the EU attract less than 10 percent duty. It extends similar concessions to 83.6 percent of products from EU.

In India’s case, 3.2 percent or $1.9 billion of imports from the EU attract more than 60 percent duty. Wine and whiskies attracted a 150 percent tariff in 2023.

India imposes a 125 percent levy on cars imported from EU. In the Budget for FY26, finance minister Nirmala Sitharaman reduced the highest rate of tariff to 70 percent but it imposed an equivalent amount of cess on these imports.

The issue of car imports has assumed significance, with Tesla looking at importing EVs from Germany to India.

A Moneycontrol analysis has shown that Germany was already among the leading exporter of EVs to India even before Elon Musk-led company’s Tesla plans.