India Seeks Tariff Relief on Textiles, Leather, and Gems in EU Trade Talks to Boost Labour-Intensive Exports

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India is intensifying its push for tariff reductions on key labour-intensive sectors—textiles, leather goods, and gems & jewellery—as part of the ongoing negotiations for a free trade agreement (FTA) with the European Union. The 13th round of talks, held from September 8–12 in New Delhi, saw significant convergence on multiple issues, with both sides aiming to conclude the deal by the end of 2025.

Commerce Minister Piyush Goyal and EU Trade Commissioner Maroš Šefčovič led the discussions, which focused on reciprocal market access, tariff harmonisation, and regulatory alignment. India’s primary objective is to secure lower duties on its traditional export strengths, while the EU is seeking concessions on automobiles, wines, and spirits.

India’s Tariff Reduction Demands: Sectoral Breakdown

India’s push for tariff cuts is centered around sectors that employ millions and contribute significantly to export earnings. These sectors currently face steep EU tariffs, limiting their competitiveness in European markets.

SectorCurrent EU Tariff RangeIndia’s Export Value (FY2024)Employment Impact
Textiles10–12%$15.2 billion45 million jobs
Leather ProductsUp to 17%$5.6 billion4.5 million jobs
Gems & Jewellery15–25%$39.7 billion2.5 million jobs

Lowering these tariffs could unlock substantial growth for Indian exporters, especially SMEs and rural artisans who rely on EU demand.

EU’s Counter Demands: Automobiles, Wines, and Spirits

While India is pushing for relief on labour-intensive exports, the EU is seeking reduced tariffs on its flagship exports. These include high-end automobiles, wines, and spirits—products that currently face some of the highest import duties in India.

EU Export CategoryCurrent Indian TariffEU Export Value to India (FY2024)
Wines150%$416 million
CBU Passenger Cars70–110%$416 million
Auto Components15%$1.4 billion

India has expressed willingness to consider phased reductions, especially for completely knocked-down (CKD) vehicles, which attract lower tariffs due to local assembly.

Trade Balance and Strategic Importance

The EU is India’s largest trading partner in goods, with bilateral trade reaching $137.5 billion in FY2024—a 90% increase over the past decade. The FTA aims to deepen this relationship by reducing tariff barriers, enhancing supply chain resilience, and promoting sustainable trade.

Trade MetricFY2024 Value
India-EU Trade Volume$137.5 billion
India’s Exports to EU$78.2 billion
India’s Imports from EU$59.3 billion
Trade Surplus$18.9 billion

India’s trade surplus with the EU underscores its export strength, particularly in sectors like textiles, pharmaceuticals, and engineering goods.

Negotiation Timeline and Next Steps

The next round of negotiations is scheduled to take place in Brussels from October 6–10, 2025. Both sides are working toward a year-end deadline to finalise the agreement, which has been in the making since 2007 and was formally revived in 2022.

Negotiation RoundLocationDateFocus Areas
13th RoundNew DelhiSept 8–12, 2025Tariffs, services, sustainability
14th RoundBrusselsOct 6–10, 2025Final convergence, legal text review
Target SigningBrusselsDecember 2025Full FTA agreement

The urgency stems from global trade disruptions and the EU’s need to diversify away from China, while India seeks to expand preferential access beyond the U.S. market.

Services and Mobility: India’s Hidden Leverage

Beyond goods, India is also pushing for liberalisation in services and professional mobility. The EU’s deep services market presents a major opportunity for Indian IT, ITeS, and consulting firms.

Services Chapter FocusIndia’s Ask
IT/ITeS AccessEasier cross-border delivery
Professional MobilityVisa facilitation, mutual recognition
Financial ServicesRegulatory harmonisation
Green Tech & ConsultingMarket access and joint ventures

India’s strength in services could be a key bargaining chip, especially as the EU seeks to anchor supply chain de-risking in pharma, chemicals, and clean energy.

Carbon Border Adjustment Mechanism: A New Challenge

India has also raised concerns over the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes levies on emissions-intensive imports. Indian negotiators are seeking flexibilities and green-transition support to ensure exporters are not priced out of the EU market.

CBAM Impact AreaIndia’s Concern
Steel & AluminiumCost competitiveness
Refined PetroleumEmissions-linked tariffs
Textile DyeingCompliance costs
Leather ProcessingSustainability standards

India is advocating for a phased implementation and technical assistance to help exporters meet EU sustainability benchmarks.

Political Sensitivities and Domestic Implications

While tariff cuts on Indian exports are broadly supported, concessions on EU imports—especially wines and luxury cars—are politically sensitive. Domestic industry groups have urged caution, citing concerns over market disruption and loss of revenue.

Sensitive SectorDomestic TariffIndustry Concern
Wines & Spirits150%Impact on local producers
CBU Vehicles110%Threat to domestic auto sector
Dairy Products60–70%Farmer protests, price pressure

The government is expected to adopt a phased approach, balancing trade liberalisation with protection for vulnerable sectors.

Conclusion: India’s Tariff Push Signals Strategic Shift in EU Trade Talks

India’s push for tariff cuts on textiles, leather, and gems in the EU trade talks reflects a strategic pivot toward boosting labour-intensive exports and securing fair market access. As negotiations enter a decisive phase, the outcome of the FTA will shape India’s trade trajectory for years to come.

With both sides aiming to conclude the deal by year-end, the next round of talks in Brussels will be critical. A balanced agreement could unlock new opportunities in goods, services, and sustainability—positioning India and the EU as pillars of a rules-based global trade order.

Disclaimer: This article is based on publicly available government statements, verified news reports, and official trade data. It is intended for informational purposes only and does not constitute financial or legal advice. All figures and timelines are subject to change based on final negotiations and policy updates.

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