MC EXCLUSIVE India can open markets gradually in trade deals using safeguards, says ex commerce secy Wadhawan

In February 2025, India and the EU decided to ramp up talks for the proposed free trade agreement

• Indefinite industry protection may limit consumer access to quality goods.
• Wadhawan backs phased tariff cuts, safeguards in India-EU free trade deal.
• India-EU FTA may cut tariffs on EU wines, spirits, and premium cars for Indians

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Former Commerce Secretary Anup Wadhawan said that India can carefully use safeguard tools, such as phased duty reductions, tariff rate quotas, and partial tariff cuts—to open up its market in trade deals.

These mechanism can be adopted for select products in the proposed free trade agreement (FTA) with the European Union, similar to the concessions granted to the United Kingdom, he said.

"These mechanisms can protect domestic players and give our producers time to adjust while opening up our markets to products like European wines and cars with concessions through the free trade agreement," Wadhawan said.

He also indicated that there is a need to keep overall tariff at a reasonable level.

“Indefinite tariff barriers to protect local industry is not a desirable policy in any event as it promotes inefficiency and prevents your consumers from having access to the best products in the world at competitive prices. If protections are indefinite, you will ultimately end up in the Ambassador, Fiat age of sorts once again, with the world consuming products which are of high quality and technologically advanced at affordable prices, while your consumers are denied this welfare enhancing access,” Wadhawan told Moneycontrol in an interview.

He explained that given that many European products cater to price segments distinct from domestic offerings, India can offer tariff concessions carefully through safeguards such as phased duty reductions, tariff rate quotas, and partial tariff cuts in the deal with EU, similar to those granted in the trade agreement with the United Kingdom.

These measures would protect domestic producers and allow them time to adjust, while gradually opening the market to European products such as wines and cars under the FTA, he said.

“Why should Indians not consume the best quality wines and cheese in the world at affordable prices. Just because the consumers are silent about their welfare issues and industry is vocal, it does not make high tariffs in an indefinite time horizon a good thing,” Wadhawan, who served as India’s commerce secretary between August 2018 and June 2021, said.

The free trade agreement between India and the EU, which is expected to be signed on January 27, is likely to lower tariffs on the bloc’s wines, spirits and other alcoholic beverages, along with simpler certification requirements, making them more affordable for Indian consumers, Moneycontrol had earlier reported.

European carmakers, especially those producing premium vehicles, are also likely to gain easier access to India, potentially boosting EU’s auto exports that currently face steep import duties.

While wines and spirits from the EU, presently face import duties of up to 150–200 percent, their luxury cars face tariffs of up to 100–125 percent.

In February 2025, India and the EU decided to ramp up talks for the proposed free trade agreement, targeting to initially close it by the end of that year to tide over ongoing disruptions from volatile trade policies.

Being negotiated for over a decade, the India-EU trade deal has 24 chapters across goods and services.

Wadhawan said domestic producers should aspire to match global quality standards and compete on price within a clear and defined timeframe.

“While we must support our manufacturers in achieving this competitiveness, they ultimately must face up to competition,” he said.