The European Union (EU) is set to urge India to reduce its high tariffs on key goods such as automobiles and alcoholic beverages, including wine and spirits, to strengthen bilateral trade relations. The EU’s push comes as it looks to diversify its economic dependencies and reduce its reliance on China. A senior EU official, speaking on condition of anonymity due to the sensitivity of the matter, stated that the bloc is keen to expand market access for its products while demonstrating flexibility on agricultural trade issues to accelerate ongoing free trade agreement negotiations.
“The Indian market remains relatively closed to some of the most commercially significant exports of the European Union and its member states’ industries, particularly in the automotive sector and the wine and spirits market,” the official explained.
European Commission President Ursula von der Leyen is scheduled to embark on a two-day visit to New Delhi starting Thursday. She will be accompanied by leaders from several EU member nations, and the visit is expected to be a crucial moment for deepening cooperation between the EU and India. The discussions come at a time of heightened geopolitical uncertainty, with both sides seeking to outline areas of mutual interest under their strategic partnership framework.
During her visit, von der Leyen is scheduled to meet Indian Prime Minister Narendra Modi on Friday. She will also hold discussions with India’s Minister of Commerce and Industry, Piyush Goyal, to explore ways to enhance trade and investment between the two regions. One of the major points on the agenda will be the upcoming round of trade negotiations, which is set to take place in Brussels from March 10 to March 14.
The EU’s renewed call for lower tariffs on specific goods aligns with similar concerns raised by the United States. In recent months, former U.S. President Donald Trump issued threats to impose reciprocal tariffs on Indian exports, which has created uncertainty for Indian exporters. Analysts from Citi Research estimate that if such measures were implemented, India could face potential trade losses amounting to approximately $7 billion annually.
India and the EU share a strong trade relationship, with the European Union ranking as India’s largest trading partner in goods. In 2024, bilateral trade between the two entities reached nearly $126 billion, reflecting an impressive 90% growth over the past decade. However, trade experts believe that there is still significant room for improvement, particularly in reducing trade barriers and streamlining regulatory processes.
In line with its “de-risking” strategy, the EU has been actively seeking to diversify its supply chains and reduce its dependency on Chinese imports. Strengthening economic and security ties with India is a key component of this strategy. The EU also considers India a crucial partner in addressing global security challenges, including cybersecurity threats, territorial disputes in the South China Sea, and broader concerns in the Indo-Pacific region.
Another significant topic likely to be discussed during von der Leyen’s visit is India’s position on the ongoing Ukraine-Russia conflict. According to the EU official, the Commission President will seek India’s support for what she describes as a “peaceful and just resolution” for Ukraine’s security. While India has maintained a neutral stance in the conflict, the EU hopes to engage New Delhi in constructive dialogue on the matter.
Beyond trade and geopolitical discussions, the EU and India may also sign an agreement to facilitate the exchange of classified security information. This cooperation would help both regions address common threats such as cyberattacks, terrorism, and other security risks. Additionally, there are discussions about expanding defense equipment trade, potentially opening new avenues for collaboration in the defense manufacturing sector.
Despite these positive developments, some trade analysts remain cautious about the likelihood of immediate breakthroughs. Ajay Srivastava, the founder of the Delhi-based think tank Global Trade Initiative and a former negotiator in India’s trade talks with the EU, believes that the EU should first recognize India as a data-secure country before substantial progress can be made on digital trade and e-commerce agreements.
While both India and the EU share concerns over China’s global influence, their immediate priorities appear to differ. “India remains primarily focused on border tensions with China, while the EU’s pressing concerns revolve around the Ukraine-Russia conflict and NATO’s role in European security matters,” Srivastava observed.
As von der Leyen’s visit unfolds, both sides will aim to find common ground on trade policies, security cooperation, and global strategic alignments. Whether these discussions translate into tangible outcomes remains to be seen, but the visit signals an important step toward closer economic and political ties between India and the European Union.