EU wants India to lower tariffs on cars, wines but reciprocity need not be ‘one for one’

Striking a more accommodating note than US President Donald Trump on India’s high tariffs, the EU has said that it did not consider reciprocity as ‘one for one’ and there can be asymmetry to account for developmental challenges, especially in agriculture.

But the bloc wants India to lower its “very high tariffs” on key items like cars, wines and spirits in the India-EU free trade agreement (FTA) being negotiated to gain a balance where both sides have positive outcomes, a senior EU official said outlining the agenda for EU President Ursula von der Leyen’s India visit later this week.Von der Leyen will be in India with her team of Commissioners on February 27-28 to meet Prime Minister Narendra Modi and representatives from key Ministries for strengthening strategic partnership at a time when Trump has been threatening its trade partners, including the EU and India, with reciprocal tariffs.

The agenda will include advancing trade, economic security and resilient supply chains, along with a common tech programme and reinforced security and defence cooperation. “We note that India is a large emerging economy with developmental challenges. It has a lot of small-scale, livelihood agriculture. So that is obviously an element that we will always reflect in our agreement. So for us, reciprocity, it doesn’t mean that it’s sort of one for one. There can be a degree of asymmetry, but the key point is that there needs to be a balance,” the official said. 

While acknowledging India’s sensitivities, the EU remains aggressive in its areas of interest. “There needs to be a balance and a `win-win’. And that is what we are pursuing in our FTA negotiations. India’s tariffs on products like cars, like wines and spirits are very high. The EU tends to reduce those tariffs to zero in its bilateral negotiations,” the official said.

India applies a basic customs duty of  around 70-100 per cent on cars while on most wines and spirits, the basic customs duty is 150 per cent...Referring to Trump’s tariff onslaught and the need to “de-risk” from China, the EU official said that the global context, in general, was conducive to India and the EU coming together on various issues, including on trade. “The case for an FTA has never been stronger. This is an opportunity to come together, to diversify and to join forces on the growth agenda,” the official said.

The EU is India’s largest regional trading partner, accounting for €124 billion worth of trade in goods in 2023 or 12.2 per cent of total Indian trade, topping the US (10.8 per cent) and China (10.5 per cent),” per EU figures. The US, however, is India’s largest trading partner country.