During European Commission President Ursula von der Leyen's visit to New Delhi, EU leaders are expected to press India to lower its car and alcoholic beverage tariffs and expand market access. Talks for an India-EU free trade agreement, which had been stalled for eight years, resumed in 2021 and now include investment protection and geographical indications.
The EU is India's largest trading partner in goods, with bilateral trade expected to reach $137.5 billion in the fiscal year 2023-24, up nearly 90% from the previous decade.
Here are the key differences between the two trading partners.
High Tariffs on Cars and Wine: The EU wants India to reduce tariffs on imported cars, whiskey, and wine by 100% to 150 percent. India claims that World Trade Organisation rules allow for differential tariffs between developed and developing countries, but has demonstrated a willingness to gradually reduce tariffs in consultation with local industry.
Carbon Tax & Deforestation Rules: India opposes the EU's proposal to impose high tariffs of 20% to 35% on high-carbon goods such as steel, aluminium, and cement beginning January 2026. So far, the EU has not indicated any relief, citing higher tariffs as part of its clean energy targets. India also opposes the EU's deforestation regulations, which require that products imported into the bloc do not come from deforested land after December 31, 2020. The regulation takes effect in December for large corporations and in June 2026 for small businesses.
Investment Protection: The EU seeks easier profit repatriation and faster dispute resolution for its companies operating in India, whereas India insists that disputes be resolved locally before international arbitration.
Data Security: India wants the EU to recognise it as a data-secure country, claiming that strict EU data transfer rules impede trade in digital services.
Movement of Professionals: India is seeking easier temporary work access for its skilled professionals in the EU, which could benefit its IT sector. The EU claims visa policies are managed by member states and demands that India liberalize its accounting, architecture, and legal services, which local industry groups oppose.
Market Access: India responds to EU market access demand by highlighting the EU's significant exports: $416 million in wine and more than $2 billion in automobiles and parts in 2023/24, including $416 million in fully built-up vehicles. The majority of EU car exports to India arrive in knocked-down form, with a 15% duty for local assembly.
India imported $61.5 billion worth of EU goods in 2023/24, while exports to the bloc totaled $75.9 billion.
Agriculture: India fears that opening its market to heavily subsidised EU farm products will harm millions of local farmers. The EU wants India to lower its agricultural tariffs, which are currently between 35% and 60%.
Intellectual Property: The EU opposes India's intellectual property policies, arguing that patent "ever-greening" harms its pharmaceutical companies. India wishes to gain greater market access for its cheaper drugs and chemicals in the EU.
