NEW DELHI – The European Union is set to push for lower tariffs on cars and wine in India in an effort to boost trade and reduce its reliance on China. This comes as the EU seeks to strengthen its strategic partnership with India and diversify its supply chains.
During her two-day visit to New Delhi, European Commission President Ursula von der Leyen, accompanied by leaders of EU member nations, will meet with Indian Prime Minister Narendra Modi and Trade Minister Piyush Goyal. The visit, which coincides with escalating geopolitical tensions, aims to outline key areas for deeper cooperation between the EU and India.
One of the main issues on the agenda will be the EU’s call for India to lower its high tariffs on cars and wine. According to a senior EU official, the Indian market is relatively closed, especially when it comes to key products of commercial interest to the EU and its member states. This includes cars, wines, and spirits. The official, who requested anonymity due to the confidential nature of the discussions, also highlighted the need for broader market access for EU products.
The EU’s push for lower tariffs comes in response to US President Donald Trump’s threat of reciprocal tariffs. The EU is seeking to expedite free trade agreement talks with India and is willing to offer flexibility on agriculture issues to achieve this goal.
The EU is India’s largest trading partner in goods, with trade reaching nearly $126 billion in 2020. This marks an increase of about 90% over the past decade. However, the EU is looking to reduce its reliance on China and diversify its supply chains. This is part of its “de-risking” strategy, which also includes strengthening economic and security ties with India.
The EU also views India as a key ally in addressing security challenges, including cyber threats and tensions in the South China Sea and Indo-Pacific. During the visit, Leyen is expected to seek India’s support for a “peaceful and just deal” for Ukraine’s security.
The EU and India are also exploring opportunities for closer cooperation in the defense sector. This includes the possibility of signing an agreement to share classified security information to tackle common threats such as cyber attacks and terrorism. The two sides may also discuss potential defense equipment trade.
However, some trade analysts are skeptical about the outcome of the visit. They believe that it may not yield tangible results. According to Ajay Srivastava, founder of the Delhi-based think-tank Global Trade Initiative and India’s former negotiator on trade talks with the EU, for substantial cooperation to take place, the EU must acknowledge India as a data-secure country. He also noted that while both parties have concerns about China, neither sees it as a top priority. India is currently focused on its border tensions with China, while the EU is more concerned with the Ukraine-Russia conflict and NATO matters.
In conclusion, the EU’s visit to India is a testament to the strong and growing strategic partnership between the two sides. The EU’s push for lower tariffs on cars and wine is a step towards boosting trade and reducing its reliance on China. With the potential for closer cooperation in various sectors, the EU and India have the opportunity to strengthen their ties and work towards shared goals of peace, security, and economic growth.
