India, EU to hold next round of FTA talks from March 10

New Delhi : India and the 27-nation European Union bloc are set to kick off their tenth round of negotiations for a proposed free trade agreement in Brussels on Monday,according to an official.

India and the EU aim to finalise their free trade agreement by the end of 2025. Recent talks between EU Commissioner Maros Sefcovic and Indian officials have focused on resolving remaining issues, with Prime Minister Narendra Modi and European Commission President Ursula von der Leyen committed to completing the agreement.

"The two sides are scheduled to hold the tenth round of negotiations for the FTA from March 10-14 in Brussels," the official said.

India and the EU resumed free trade agreement talks in June 2022, after a 9-year pause. Key hurdles include agricultural tariffs, auto tariffs, and regulatory barriers. Talks also cover investment protection and geographical indications agreements, according to the Global Trade Research Initiative (GTRI).

India is showing reluctance in reducing auto import duties and is exercising caution in committing to the EU's demands on sustainability and labor standards. Additionally, services trade remains a contentious issue, with India pushing for greater ease in mobility for professionals and seeking recognition of its data security measures under the EU's General Data Protection Regulation (GDPR) framework.

"Government procurement, investment protection, and environmental regulations like the Carbon Border Adjustment Mechanism (CBAM) further complicate talks. Despite these challenges, a successful agreement could significantly enhance bilateral trade, which exceeded USD 190 billion in FY 2024," GTRI founder Ajay Srivastava said.

India exported USD 76 billion in goods and USD 30 billion in services to the EU, while the EU exported USD 61.5 billion in goods and USD 23 billion in services to India.

Agriculture remains a sensitive area in India-EU trade talks. The EU wants India to cut tariffs on cheese and skimmed milk powder, but India is reluctant, seeking to protect its domestic dairy industry. The EU's complex agricultural tariff system, with Non-Ad Valorem tariffs on 915 products, adds to the challenge.

He stated that high tariffs, strict sanitary and phytosanitary measures, and technical barriers to trade hinder Indian agricultural exports from entering the European market, and even reduced tariffs won't overcome the EU's regulatory hurdles.

European winemakers want better access to India's market, where imported wines face a 150% tariff. The EU seeks to reduce this to 30-40%. India previously cut tariffs on Australian wines to 50% over 10 years under the ECTA agreement.

India and the EU may eliminate tariffs on textiles and garments from day one of their free trade agreement. Currently, Indian textiles face 12-16% tariffs in the EU, making them less competitive than exports from Bangladesh and Vietnam.

European car manufacturers want India to cut import duties on luxury vehicles from 100-125% to 10-20%. This would make cars like BMW, Mercedes-Benz, and Volkswagen more affordable for Indian consumers.

The EU exports over $2 billion worth of autos and parts to India yearly, mostly in CKD form, which faces a 15% tariff. India's auto sector is a significant economic driver, accounting for one-third of manufacturing GDP and employing 40 million people.

If India cuts tariffs for EU autos, it may have to do the same for other trading partners, reducing incentives for Japanese and Korean automakers to manufacture in India. A possible compromise could involve allowing a limited number of European cars to enter India at lower tariffs, he said.

(inputs from PTI)