India and Europe agree on nearly half of trade deal ‘chapters’

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India and the EU have reached consensus on nearly half of the subjects to be lined by a commerce deal they hope to seal this yr and have agreed that the pact won’t cowl some “delicate” farming merchandise akin to dairy, in response to folks with data of the talks.

The folks mentioned negotiators had agreed eight out of roughly 20 deal “chapters”, every masking subjects akin to guidelines of origin or mental property rights, after the EU in February stepped up efforts to bolster financial ties with the world’s fifth-largest financial system.

The progress will gasoline hopes {that a} deal between New Delhi and Brussels may help offset among the influence on either side’ commerce from the tariffs imposed or threatened by US President Donald Trump, whereas the exclusion of dairy merchandise will come as a giant aid to Indian farmers and milk processors.

“The expectation is that we’ll shut a deal in December; a whole lot of work goes in direction of that finish,” mentioned one particular person conversant in India’s stance on the talks, who requested to not be recognized.

“Good progress has been made” due to the “momentum that has picked up within the final two rounds” of negotiations in New Delhi and Brussels, the particular person added.

Indian Prime Minister Narendra Modi and European Fee president Ursula von der Leyen agreed in New Delhi in February to push to seal the commerce deal this yr. Indian commerce minister Piyush Goyal met EU commerce commissioner Maroš Šefčovič in Paris on Monday.

Olof Gill, EU commerce spokesperson, mentioned work had intensified and was “advancing throughout the board”. A twelfth spherical of negotiations was anticipated firstly of July, he mentioned, whereas “intensive engagements proceed within the meantime”.

Individuals with data of the newest talks in Brussels final month mentioned points resolved to this point have been primarily in much less controversial areas akin to customs and commerce facilitation and vital sticking factors remained.

New Delhi has since independence in 1947 stored excessive tariff partitions round agriculture, which employs practically half of the workforce of the world’s most populous nation.

Modi’s authorities, which has been buffeted by mass farming protests in recent times, is searching for to retain its excessive import levies on dairy merchandise and different agricultural imports in ongoing talks with the US.

“There are some political sensitivities associated to some merchandise and people sensitivities should be taken care of,” mentioned one of many folks conversant in India’s talks with the EU.

A senior European official concerned within the negotiations mentioned “dairy general” was a “no-go” space.

“We have now outlined a fringe for what may very well be significant free commerce within the curiosity of each events and milk will not be a part of it,” the official mentioned.

India is the world’s largest milk producer, with output of 211mn tonnes produced within the yr 2024-25, primarily from 15mn small farmers, in response to the federal government.

The nation imported dairy merchandise at “cheap duties” of 30-60 per cent, mentioned Rupinder Singh Sodhi, president of the Indian Dairy Affiliation, a foyer group. “India doesn’t want dairy from exterior.”

Individuals near the negotiations in Brussels and New Delhi mentioned rice has additionally been excluded from the negotiations.

Indian officers have privately mentioned any concessions to the EU would partially mirror different latest commerce pacts. In a cope with the UK last month, India agreed to chop levies on alcoholic spirits, vehicles, textiles and engineering items. Dairy was additionally largely overlooked of negotiations with the UK.

The EU will not be happy with the entry India is providing for vehicles and spirits, merchandise that Indian commerce officers mentioned could be among the many final to be mentioned.

The EU now wished to speak about “economically significant market entry”, mentioned one official in Brussels.

One other bone of competition, in response to Indian officers, is the carbon border adjustment mechanism, beneath which the EU plans to levy tariffs from subsequent yr.

India has already denounced the mechanism, which is meant to penalise carbon emitted within the manufacturing of imported items akin to cement, fertilisers, iron and metal, and chemical substances.

One of many folks conversant in the negotiations in New Delhi mentioned CBAM “would have an adversarial impact on commerce” because it might hit India’s heavy trade. “All the things is on the playing cards when it comes to how we must always, collectively, deal with this challenge”, with India probably pushing for deferment of CBAM, the particular person mentioned.