The European Union wants India to lower import duties on cars, wine, and spirits to boost trade.

A top EU official told news agency Reuters that the bloc will push India to open its market further as part of ongoing trade talks.

The EU is looking to reduce its dependence on China and sees India as a key partner.

WHAT’S THE EU ASKING FOR?

The EU wants India to cut tariffs on goods that matter to European businesses.

“The Indian market is relatively closed, especially for key products like cars, wines, and spirits,” the official said.

In return, the EU is willing to be more flexible on agricultural issues to speed up negotiations on a free trade agreement.

It is worth mentioning that European Commission President Ursula von der Leyen is visiting India for two days, starting Thursday.

She will meet Prime Minister Narendra Modi and Trade Minister Piyush Goyal. The next round of trade talks is scheduled for March 10-14 in Brussels.

WHY THE URGENCY?

The push comes as former US President Donald Trump has warned of imposing “reciprocal tariffs” from April, which has put Indian exporters on edge.

Analysts at Citi Research estimate that India could lose around $7 billion per year if such tariffs are implemented.

The EU is India’s biggest trading partner for goods, with trade reaching $126 billion in 2024, up nearly 90% in the last decade.

REDUCE CHINESE DEPENDENCE

The EU is working on a strategy to “de-risk” its economy by cutting reliance on China. Strengthening trade with India is part of this plan.

Apart from trade, the EU also sees India as an important security partner, given rising cyber threats and tensions in regions like the South China Sea and the Indo-Pacific.

Von der Leyen is also expected to seek India’s backing for a “peaceful and just deal” on Ukraine.

Talks may include an agreement on sharing classified security information to tackle common threats like cyberattacks and terrorism. There’s also a possibility of exploring defence trade.

Despite the discussions, experts aren’t too optimistic about quick results. Trade analyst Ajay Srivastava, who previously negotiated trade talks with the EU, told Reuters that progress will be slow unless the EU recognises India as a “data-secure” country.

“Both sides have concerns about China, but they have different priorities,” Srivastava said.

While India is focused on border tensions with China, the EU is more worried about Ukraine, Russia, and NATO.

With inputs from Reuters