During the last series of talks between the two parties in Brussels from March 10 to 14, a decision to reduce the tasks of textile exports from India and premium alcoholic drinks from the EU has become a key negotiation maneuver, three people aware of the affair told about Mint under cover of anonymity.
Currently, India imposes up to 150% of EU alcoholic beverages, while the 27 countries allow the EU a duty of up to 14% on Indian textile goods. Compared, the India textile rival, Bangladesh, has free access to the European market, without import right.
“Spirit concessions are among several other important questions in the negotiation table,” said the first person mentioned above. “India explores the possibility of reducing prices on EU alcoholic beverages while protecting the interests of national manufacturers.”
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This person added that the talks were progressing well and “we get closer to the finalization of a mutually beneficial trade agreement which will increase exports from both parties”.
The new price structure for alcohol envisaged in the ALE under negotiation should differ considerably from the model adopted in the Indian-Australia pact. Unlike the Australian agreement, where the price reductions on alcoholic beverages were linked to the price bands and gradually reduced over a period of 10 years, the structure should be more uniform in the case of the EU and not on the basis of pricing segmentation.
“The negotiators work on a separate formula, perhaps a flat phase reduction or a model based on a threshold adapted to the product profile of the EU,” said the third person above, adding that in return, the EU should eliminate prices on Indian textile products.
The requests sent by email to the Ministry of Commerce remained unanswered until the time of the press.
EU spokesperson Olof Gill said in response to an email question that the 10th round of talks was part of a wider push to conclude the ALE negotiations at the end of 2025, as agreed between the president of the EU Ursula von der Leyen and Prime Minister Narendra Modi during the visit of Von Der Leyen to India on February 28.
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“For many key areas, the EU and India have different approaches, objectives and legal and administrative traditions; this translates, in certain cases, at different levels of ambition,” said Gill. “In particular, negotiators focus on the main questions of a future agreement in order to try to identify the contours of an access to the economically significant market. During this Tour, the two parties aimed to obtain greater clarity in their respective positions in the current fields.”
The 10th round of talks focused on the main commercial areas, including goods, services, investment and government purchases. In addition to the trade agreement, discussions also take place on an investment protection pact and an agreement on geographic indications (GIS).
The two parties have agreed to accelerate the process, and the 11th round of conferences should take place in New Delhi from 12 to 16 May. The two parties had taken over the talks in June 2022 after a gap of more than eight years. Negotiations had stalled in 2013 due to differences on the quantity of opening their markets.
Industry reactions
“The signing of an ALE between India and the EU has the potential to change the situation for the textile and clothing sector of India,” said Prabhu Dhamodharan, head of the Indian Texpreneurs Federation (ITF). “Currently, India has only 5% share on the EU clothing market, compared to 28% of China and 21% of Bangladesh. With the FTA in place, our market share can potentially double in two years, thanks to the competitive advantage acquired thanks to zero access.”
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“The rapid growth of Bangladesh in the EU has been largely motivated by its duty franchise advantage. With similar access, India can become much more competitive,” said Dhamodharan, adding that dubbing of current $ 4.5 billion in India could create 600,000 to 700,000 new jobs in the clothing sector.
“The EU imports a value of $ 92 billion a year, making it an even larger market than the United States,” said Dhamodharan.
Meanwhile, Annant S. Iyer, Director General of the Confederation of Indian Alcoholic Drinking Companies (CIABC), said the Indian alcoholic drinks was open to a reduction in import rights, but that it should be removed over time. He said the CIABC has already urged the government to reduce customs tasks by 150% to 50% over a period of 10 years.
However, Iyer has warned that strict rules of origin are necessary in the India-EU FTA, because the relaxed rules could allow products from countries not of the EU to be transported through EU nations to India to take advantage of rights reductions.
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“We recommend that only the products made in the EU be eligible for the concessions under the ALE,” said Iyer. “This will prevent unfair commercial practices and will provide fair playground for Indian producers.”
India-EU Trade
Textile exports from India to Europe have decreased in the past three years. During fiscal year 22, exports amounted to $ 10.83 billion, which marginally $ 10.48 billion in exercise 23 and dropped to $ 9.66 billion in 2012, according to data from the Ministry of Commerce.
The main textile products shipped to European markets include ready -to -use clothing in all textile categories, cotton wires, fabrics and make -ups, hand -based products, artificial fiber -based textiles, crafts excluding handmade carpets, carpets and manufactured products based on jute, including floor coverings.
India has reduced import duties to Bourbon’s American whiskey from 150% to 100%, in a decision considered a gesture to appease the United States after the meeting between the chiefs of the two countries in February.
On the other hand, the US administration had threatened in March in March in March to impose a 200% rate on European alcoholic beverages in response to the EU decision to take a 50% tariff on American minds. However, in response to the American threat, the EU has revised its list of reprisal prices and removed American bourbon and American wine to avoid additional escalation and protect its own alcohol exports.
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