Europe and India reach accord on approximately half of trade agreement sections.

Europe and India reach accord on approximately half of trade agreement sections.

A Snappy Take on India-EU Trade Talks: Dairy, Cars, and the Green Tax

India and the EU are square in the middle of a trade negotiation, aiming to wrap things up by year-end. Despite making headway in critical sections like origin rules and IP rights, there's much Left to be sorted out [wink].

In February, the EU ramped up its efforts to strengthen economic bonds with the world's fifth-biggest economy. They've managed to iron out roughly eight chapters, but there are still a few prob-lem-atic issues popping up [enter serious mode].

One sticking point revolves around sensitive farming goods, such as milk, where India's keeping its high tariff barriers. This move's a huge relief for local farmers and milk processors, but it's not what the EU is looking for. They're hopping for lower import duties on dairy products, mainly cheese and skimmed milk powder (SMP)[1][2].

On the flip side, India has been reluctant to budge in the dairy sector and wants to keep its domestic industry protected[3][5]. As for automobiles, the EU manufacturers crave a free pass on imported cars, aiming to slash current tariffs[2].

Indian-made vehicles typically have tariffs as high as 70%, but EU's auto exports predominantly enter India in the cheaper "knocked-down" forms[2]. Wine producers from the Old Continent also eye increased market access, seeking to lower tariffs from a whopping 150% to around 30-40%[2].

Another hot button issue: the EU's proposal for a carbon border adjustment mechanism (CBAM). India's heavy industry is nervous about the potential extra costs CBAM might impose[5]. India's been voicing its worries, considering this move could be detrimental to its industrial sector[5].

So, while the India-EU trade deal inching towards finalization, there's still the matter of dairy, cars, spirits, and CBAM to figure out. Let's hope Santa brings them an early Christmas present—a sweet deal!

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Background Information

• EU Push: The EU stepped up its efforts to bolster economic ties with India in February 2025[1].
• Tariffs and Trump: The India-EU trade deal aims to alleviate some impact on both sides' trade from tariffs imposed or threatened by US President Donald Trump[1].
• India's Agricultural History: India has maintained high tariff walls around agriculture since its independence in 1947, due to the sector's substantial employment[2].
• Modi's Resistance: Modi's government continues to uphold high tariffs on dairy products and other agricultural imports in international negotiations[3].
• UK Deal: India agreed to cut levies on alcoholic spirits, cars, textiles, and engineering goods in a recent trade pact with the UK, while dairy remained mostly unaffected[4].
• EU's Dissatisfaction: The EU is not pleased with the level of car and spirit access India has offered, making it a bone of contention in the trade negotiations[4].
• CBAM Controversy: India has already expressed opposition to the EU's carbon border adjustment mechanism, viewing it as a potential threat to its heavy industry[5].

Interesting Insights

• India's Milk Production: India is the world's largest milk producer, with an output of 211 million tonnes in 2024-25[6].
• Indian Dairy Imports: India imports dairy products at reasonable duties of 30-60%[6].
• Excluded Crops: Apart from dairy and rice, other agricultural products like wheat and sugar have also been excluded from the India-EU trade negotiations[5].
• Past Precedents: India's concessions in the ongoing trade talks might resemble concessions made in other recent trade pacts[5].
• Adverse Effect: India might push for a deferral of the EU's carbon border adjustment mechanism, concerned about its potential adverse impact on trade[5].

1. The EU is seeking lower import duties on dairy products, particularly cheese and skimmed milk powder, in its negotiations with India's fifth-largest economy.
2. In the automobile sector, the EU manufacturers are pushing for a free pass on imported cars to slash current tariffs, while Indian-made vehicles typically have high tariffs.
3. Wine producers from the EU are also aiming for increased market access, seeking to lower tariffs from a whopping 150% to around 30-40%.
4. India is concerned about the potential extra costs the EU's carbon border adjustment mechanism (CBAM) might impose on its heavy industry, and has voiced its opposition to the proposal.

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