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    India-EU trade talks hit deadlock over import duty

    Synopsis

    India’s trade talks with European Union seem to have deadlocked over the import duty New Delhi levies on alcohol and automobiles.

    In automobiles, India is understood to have agreed to allow imports of 2.5 lakh cars at 10% duty, a sixth of 60% it levies now, spread over five years.
    NEW DELHI: India’s trade talks with European Union seem to have deadlocked over the import duty New Delhi levies on alcohol and automobiles. India says it has already made a liberal offer that is not negotiable any more, but the EU says it wants further cut in import duties that are a maximum of 60% on cars and 150% on whisky. “We have already made liberal offers in both alcohol and automobiles and the EU welcomed it. But now they are trying to re-open areas that have already been agreed upon which is not acceptable to us,” a government official told ET.

    The issue will come up for discussions again when negotiators meet next month.

    New Delhi is understood to have agreed to bring down duties on wine by more than half from 150% to 40% above the threshold level of $4 per litre and whiskies over $6-$7 per litre.“ The EU is now pushing for cheaper alcohol to be entitled to the duty cuts offered and has asked us to lower the threshold level for wines to $3.2 per litre,” the official said.

    Similarly, even in automobiles the EU has demanded concessions over and above what the two sides agreed upon earlier. “We had sealed the deal on automobiles earlier this year. New Delhi had offered the EU a very generous deal and there is no reason why it should be re-opened,” the official said.

    In automobiles, India is understood to have agreed to allow imports of 2.5 lakh cars at 10% duty, a sixth of 60% it levies now, spread over five years. For cars outside the quota, New Delhi has offered to consider reducing import tariffs by half to 30%.

    So far, India has not offered concessions on either alcohol or cars to any of its trading partners in its bilateral deals as these two sectors are young and hold a lot of growth potential. The Indian automobile industry, which has been protected so far be-hind high import tariff walls, is apprehensive that lowering duties for EU countries could spell havoc for the infant domestic industry.

    Industry body SIAM has warned that duty concessions will keep out investments from the country as foreign car makers would prefer to export their cars to India rather than set up manufacturing facilities.

    India, which hopes to gain in the services sector, is also unhappy with the progress on issues such as gaining data secure status in the EU that will increase flow of sophisticated offshore business to the country.

    In a recent meeting with the EU commissioner for taxation and customs union, India’s commerce minister Anand Sharma criticised the delay in EU’s study of India’s security processes.
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    1 Comment on this Story

    TelliameD2958 days ago
    So, the govt will continue to subsidize petrol, diesel, cooking gas and electricity so that people can spend on booze and fancy cars?
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