India’s protectionist stance on agriculture remains a major obstacle in EU-India trade talks, as both parties aim to finalize a significant trade agreement. While India maintains some of the highest tariffs in the world to protect its developing economy, the EU is pushing for greater market access, especially for agricultural products like cheese and spirits.
In particular, India’s average agricultural tariff is 39.2%, much higher than the EU’s 11.7%, and the country is wary of liberalizing its agricultural market, fearing it would harm its vulnerable rural population. Agriculture is crucial to India’s economy, employing nearly 44% of the workforce, whereas in the EU, it represents just 1.3% of GDP.
The EU’s focus on removing tariffs faces additional challenges, including concerns over the potential impact on India’s dairy industry, which could be undermined by subsidized European imports. Additionally, high tariffs protect India’s domestic beverage industry, particularly spirits, which are subject to steep import duties of up to 150%.
The negotiations also face opposition from European sectors, such as sugar producers, who are concerned about India’s subsidies to its sugar industry, which the WTO ruled violate trade agreements. European farmers warn that further concessions could hurt their industry, already struggling with falling prices and market uncertainties.
Despite these challenges, both sides continue to push for a deal, with the EU prioritizing an agreement to bolster its trade ties with India, the world’s largest market after China.
“We need an agreement with an ambitious timetable to remove tariffs for key European sectors, including spirits,” said Ulrich Adam, director general of SpiritsEUROPE, while acknowledging that negotiations will be tough.
