India and the European Union are engaged in crucial trade negotiations this week in New Delhi, aiming to bridge gaps in agriculture, dairy, and non-tariff barriers.
Both sides are working towards an ambitious year-end deadline for a comprehensive deal, according to a Reuters report.
India is looking to strengthen its global alliances after the US President Donald Trump increased tariffs on Indian products to 50% last month.
This move, a response to India’s oil purchases from Russia, has negatively impacted Indian exports, including textiles, leather, and chemicals.
Since Trump’s re-election, negotiations that began in 2022 have intensified.
Pursuing partnerships
Brussels, confronting Trump’s tariffs, has also expedited its pursuit of trade partnerships, finalising agreements with Mexico and the South American Mercosur nations, and advancing discussions with India, Indonesia, and the United Arab Emirates.
A deal with the EU could also strengthen India’s ties with the West.
This follows recent concerns regarding Prime Minister Narendra Modi’s visit to China for a summit that included Russian President Vladimir Putin and other leaders.
Thus far, 11 of the 23 chapters currently under negotiation have been concluded, the Reuters report claimed.
These finalised chapters encompass customs, digital trade, intellectual property, competition, subsidies, dispute settlement, and anti-fraud measures, according to the report.
Obstacles persist, as India is unwilling to make concessions on agriculture and dairy due to concerns for farmers’ livelihoods.
Conversely, the EU is advocating for increased access to the Indian market for automobiles and alcoholic beverages.
An EU official highlighted in the report ongoing disagreements concerning rules of origin, food safety standards, labour and environmental obligations, and what Brussels perceives as Indian quality control orders that restrict trade through non-tariff barriers.
Russian oil purchases
In addition, Brussels is pressuring New Delhi regarding its purchases of discounted Russian oil, which EU officials contend weakens the sanctions imposed on Moscow.
Although not expected to be a central topic, this issue could overshadow negotiations and face opposition in the European Parliament, which must ratify any agreement, according to EU officials.
EU officials, including European Agriculture Commissioner Christophe Hansen and EU trade chief Maros Sefcovic, are scheduled to visit Delhi later this week for talks with their Indian counterparts.
Simultaneously, the EU’s Political and Security Committee, chaired by Delphine Pronk and composed of ambassadors from all 27 member states, is scheduled to visit India from September 10-14.
Their itinerary includes meetings with government officials, defence industry executives, and various think tanks.
The EU’s carbon border tax, set to begin in 2026, is another point of contention.
This tax will impose levies on carbon-intensive imports like steel and aluminium.
Brussels defends its climate policy, while Indian officials describe it as a hidden trade barrier.
EU officials expressed willingness to be flexible in their implementation to ease the concerns of small and medium-sized businesses.
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