Whisky for Weaves? India, EU Eye Duty Relief Swap in Mega Trade Deal

As India and the European Union (EU) are negotiating "the largest deal [free trade agreement or FTA] of this kind anywhere in the world", Mint newspaper reported that in their latest round of talks, textile and premium alcoholic beverages took the centre-stage.

After US President Donald Trump sent shockwaves to the global markets with "reciprocal" tariffs, countries are fast-forwarding trade and investment-related talks. Earlier, Outlook Business reported that India held trade-related discussions with over 10 countries in March alone. As a part of the same discussions, between March 10 and 14, India and the EU held the 10th round of talks to resolve the outstanding issues in their agreement.

Citing three sources aware of the matter, the report said that discussions majorly focused on reducing duties on textile exports from India and premium alcoholic beverages from the EU. India imposes up to 150% duty on alcoholic beverages from the EU, while the union levies a duty of up to 14% on Indian textile items. Bangladesh, India's rival in textiles, faces no duty in the 27-country union.

“Negotiators are working on a separate formula, possibly a flat phased reduction or a threshold-based model tailored to the EU’s product profile," sources informed the newspaper. It also added that in return, the EU is expected to eliminate tariffs on Indian textile products.

India-EU Trade Relations

The EU is India's largest trading partner, accounting for €124bn worth of trade in goods in 2023 or 12.2% of total Indian trade, topping the USA at 10.8% and China at 10.5%.

The EU also ranked as the second-largest destination for Indian exports, accounting for 17.5% of outbound shipments, just behind the US at 17.6%. Trade in goods between the EU and India has increased by almost 90% in the last decade.

Meanwhile, India's textile exports to Europe have witnessed a decline in the past three years. According to the report, in FY22, exports were valued at $10.83bn, slipping slightly to $10.48bn in FY23, and falling further to $9.66bn in FY24.