Trade deals: India hopes to conclude talks with EU, UK in 2024; looks at Latin America to expand volumes

Director General at the Confederation of Indian Alcoholic Beverage Companies (CIABC), Vinod Giri agreed with the government's view that an FTA should be fair and equitable, and it should work both ways. He told CNBC-TV18 that the alcohol industry had agreed for a reduction of duty from current 150% to 100% and over time to 50%, as there's a difference in cost of production between both countries.

However, he said that there should be a mechanism, like a minimum import price, to stop practices like under-invoicing. For equal opportunities, the Indian alcohol industry has sought removal of the maturation condition in the UK laws, where currently a product has to be matured for three years to be called whisky.

Differences continue to remain between India and the UK over tariffs on alcohol, rules of origin and duty concessions for EVs. While India's External Affairs Minister is hopeful of a mutually beneficial "landing point", both nations are clear that any deal has to be in national interest. Describing wines and processed items as sensitive for India but areas of ambition for the UK, former Commerce Secretary Anup Wadhawan has called for a way forward to balance India's sensitivity with British interest.

India EU trade talks restarted in 2022 after nine years of talks had collapsed in 2013 due to differences on customs duties on automobiles, alcohol products and movement of professionals. While there is a strong political intent this time to have an FTA, the European Union has concerns over investment protection and India is concerned about EU's Carbon Border Adjustment Mechanism or Carbon Tax.

Terming carbon tax as a big issue, Wadhawan said that there can't be a situation where trade is undone & the FTA becomes redundant, while calling for nations to not be too ambitious or insensitive to others' concerns. Describing the best FTAs as the ones with countries with complementarity, he suggested an FTA with Africa as a huge potential avenue for growth.

India's leadership will have to take a political call to cross any hurdles with the EU and the UK, and any trade deal with Canada looks highly unlikely in the near future. As these complicated talks continue, India is also looking at Latin America to deepen trade ties & is holding talks with MERCOSUR nations comprising Brazil, Argentina, Paraguay and Uruguay to widen the scope of the existing preferential trade agreement. But with the BJP getting into election mode next year, it is possible that any trade deal may be postponed till after the general election.