INDIA AND EU TO RESUME TRADE TALKS NEXT WEEK WITH WINE DUTIES HIGH ON AGENDA
By Siulan Law Mathews DipWSET
Credit: Naveed Ahmed/Unsplash
India and the European Union (EU) will resume free trade negotiations next week with tariff concessions on imported wines and automobiles expected to be high on the agenda.
Times of India quoted government sources as saying that the long-awaited talks will take place on 17 June in Brussels, where India’s Commerce and Industry Minister Piyush Goyal will visit after attending WTO ministerial meeting in Geneva later this week.
India and the EU had launched talks for a free trade agreement almost 15 years ago, but the negotiations stalled around 2013.
Two key areas of contention were import duties on wines and spirits and automobiles, which the Indian government was not prepared to concede.
The two sides agreed to resume the talks last year and it took them a little more than a year to kick start the new round of talks.
As India has already granted wines and spirit tariff concessions to Australia in interim trade agreement signed in April, it is expected that negotiations on wines and spirits will be less contentious than in the previous talks.
India committed to cut tariffs on Australian wine progressively in the interim agreement. Tariffs on Australian wines with an import price of over USD5 per 750ml bottle will decrease to 100 percent upon entry into force, expected within four months from the signing date, with a further phased reduction of 5 percent per year for 10 years down to 50 percent.
While tariffs on Australian wines with a value of over USD15 per 750ml bottle will decrease to 75 percent upon entry into force, with a further phased reduction of 5 percent per year for 10 years down to 25 per cent.
According to a report released by the Indian Council for Research on International Economic Relations, just about 2% of India’s wine imports from Australia are above the price thresholds set for duty reductions under the interim trade agreement.
Similarly, reducing duties for European cars is no longer an area as sticky as before, as the domestic market already has a large presence of foreign auto makers, the India government realises that maintaining high tariffs is no longer an effective protection for the domestic auto industry.
Instead, India is reportedly hoping to get bigger access into the EU market for its textiles, leather and services during this round of talks.
The EU was India’s second largest trading partner in 2020-21 after the USA. Total exports and imports between the two amount to USD116.4 billion, marginally ahead that of trade with China at USD115.4b.
USA was India biggest trading partnered with total imports and exports valued at USD119. 4billion during the 2020-21 financial year, according to official data.
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