The European Union is pressing India to reduce tariffs on wine, spirits, and other key exports as part of ongoing efforts to enhance bilateral trade.
This push comes as former U.S. President Donald Trump has signaled plans to impose reciprocal tariffs on EU goods starting in early April, raising concerns over potential disruptions to supply chains and market access for Indian exporters.
High-Level Talks Between EU and India
European Commission President Ursula von der Leyen is set to visit India from February 28 to March 1, accompanied by leaders from EU member nations. The visit comes at a crucial moment amid escalating geopolitical tensions, with Brussels and New Delhi aiming to solidify their strategic partnership. Key discussions will center on deepening economic cooperation, with von der Leyen scheduled to meet Indian Prime Minister Narendra Modi on Friday, followed by talks with Trade Minister Piyush Goyal.
The next round of trade negotiations between the EU and India is set to take place in Brussels from March 10-14, where reducing import tariffs on European goods, including automobiles, wines, and spirits, is expected to be a key focus.
EU-India Trade Relations and Market Dynamics
The EU is India’s largest trading partner, with bilateral trade in goods reaching nearly USD 126 billion in 2024—an increase of approximately 90% over the past decade.
“The Indian market remains relatively closed, particularly for key European products such as cars, wine, and spirits—all of which are of significant commercial interest to the EU and its member states,” an EU official told Reuters.
While India has been a strong market for spirits and beer, wine remains a niche category. Per capita wine consumption in India stood at just 0.026 liters per person per year in 2022, according to data from the Canadian government. Despite consuming 6.2 billion liters of alcohol in 2022, wine accounted for only 37.5 million liters, representing just 0.6% of total alcohol consumption, according to Euromonitor.
India’s Growing Wine Market Potential
India’s expanding middle class is expected to play a crucial role in the growth of the country’s wine market. Off-trade wine sales surged during the pandemic, with the overall market projected to grow from just under USD 197 million in 2022 to over USD 700 million by 2030.
The middle class, which comprised 31% of the population in 2023, is expected to grow to 60% by 2047, positioning India as an emerging market for European wines. However, import tariffs remain a significant barrier to market expansion.
Challenges in India’s Alcohol Tax Structure
India’s complex and high taxation on alcohol remains one of the biggest challenges for European wine and spirits exporters. The country imposes a 150% federal import tariff on wines, in addition to varying state-level taxes.
Karnataka, India’s largest wine-consuming state, has the highest alcohol tax rate at 83% of the maximum retail price, while Delhi follows with a 62% tax rate. In contrast, Goa (49%) and Haryana (47%) impose comparatively lower taxes, making them more accessible markets for wine imports.
Implications of Trade Talks
The ongoing trade discussions between Brussels and New Delhi could determine whether the EU secures better access to the Indian market, particularly in the wine and spirits segment. A reduction in tariffs would provide a significant boost to European exporters while offering Indian consumers a broader range of high-quality wines at more competitive prices.
As India’s wine market matures, regulatory changes and lower trade barriers could set the stage for one of the world’s most promising yet challenging wine markets.
Source: Vino-Joy