The European Union is making a renewed push for India to lower import duties on key European exports such as automobiles, wine, and spirits as part of the ongoing negotiations for a free trade agreement (FTA). A senior EU official, speaking to Reuters, emphasized that India’s market remains relatively closed to these high-value goods, which are essential for European businesses seeking to expand their presence in the country. The EU believes that reducing tariffs in these sectors would enhance bilateral trade and strengthen economic ties between the two regions, benefiting both European exporters and Indian consumers.
The demand for tariff reductions comes as part of the broader EU-India FTA discussions, which have been ongoing for several years without significant progress. To accelerate negotiations, the EU is reportedly willing to show flexibility on agricultural trade barriers, a long-standing concern for India. In return, European negotiators expect India to ease restrictions on European goods that have traditionally faced high import duties.
This latest push gains urgency as European Commission President Ursula von der Leyen prepares to visit India for a two-day trip starting Thursday. During her visit, she will meet with Prime Minister Narendra Modi and Trade Minister Piyush Goyal to discuss trade-related matters and other key areas of cooperation. The timing of the visit is crucial, as the next formal round of EU-India trade talks is scheduled to take place in Brussels from March 10-14.
The EU’s push for an FTA with India is also part of its broader economic strategy to reduce its dependence on China. Over the past few years, Brussels has been working on a “de-risking” strategy, which involves diversifying trade partnerships and reducing reliance on any single country—especially China, which has been the EU’s largest trade partner but also a source of political and economic tensions. Strengthening trade relations with India is seen as a vital step in this process, as India offers a large consumer base, a growing economy, and an alternative manufacturing hub.
Apart from economic concerns, security issues are also expected to be on the agenda during von der Leyen’s visit. With global tensions rising, particularly in the Indo-Pacific region and the South China Sea, the EU is looking to deepen its strategic ties with India. Reports indicate that von der Leyen may seek India’s backing for a “peaceful and just resolution” to the war in Ukraine. The EU has been a vocal critic of Russia’s invasion of Ukraine and is keen to rally international support against Moscow. However, India has so far maintained a neutral stance, balancing its ties with both Western nations and Russia.
Another significant aspect of the discussions could involve the sharing of classified security information. The EU and India face common threats, including cyberattacks, terrorism, and geopolitical instability, making intelligence-sharing a potential area of cooperation. Furthermore, there is growing speculation that the two sides may explore opportunities for defence trade, signaling an expansion of their partnership beyond just economic matters.
The urgency behind the EU’s push for a trade deal is further amplified by developments in the United States. Former US President Donald Trump has recently warned that if he returns to power, he could impose “reciprocal tariffs” as early as April. Such tariffs could pose a major challenge for Indian exporters, with analysts at Citi Research estimating that India could lose up to $7 billion annually if these measures are implemented. Given this uncertainty in US-India trade relations, securing a stable and beneficial trade agreement with the EU has become even more crucial for India.
Currently, the EU is India’s largest trading partner in goods, with total trade between the two reaching $126 billion in 2024—an increase of nearly 90% over the past decade. Strengthening this economic relationship could provide Indian exporters with greater market access, more investment opportunities, and a buffer against potential disruptions in trade with other global partners.
Despite the positive outlook, trade experts remain skeptical about the likelihood of a swift agreement. Trade analyst Ajay Srivastava, who has previously negotiated trade agreements with the EU, pointed out that progress will remain slow unless Brussels formally recognizes India as a “data-secure” country. This designation is critical for Indian businesses handling European data and has been a major sticking point in negotiations. Without this recognition, Indian companies face stricter data regulations when dealing with European clients, limiting their ability to expand into the EU market.
Another challenge lies in the differing geopolitical priorities of India and the EU. While both share concerns about China, their immediate focuses are different—India’s primary concern remains its border tensions with China, whereas the EU is more focused on Russia’s aggression in Ukraine, NATO security issues, and broader European stability. These differences could complicate negotiations, as each side seeks to align trade discussions with their strategic interests.
Moreover, there is significant domestic opposition in India to reducing tariffs on European products. Many Indian automakers, winemakers, and spirits manufacturers have long opposed tariff cuts on European goods, arguing that lower duties would hurt domestic industries and allow foreign competitors to dominate the market. Similarly, agricultural and dairy lobbies in the EU have raised concerns about Indian exports gaining easier access to European markets, fearing increased competition. These domestic political and economic pressures could slow the progress of FTA discussions, making a final agreement harder to achieve in the short term.
While von der Leyen’s visit to India signals a renewed push for trade and strategic cooperation, the road to a comprehensive trade agreement remains challenging. Both India and the EU will need to navigate economic, political, and security concerns to reach a balanced deal that satisfies their respective interests. The upcoming negotiations in Brussels will be crucial in determining whether the two sides can find common ground and make meaningful progress toward a historic trade agreement.
