The European Union is pushing India to lower tariffs on wine, spirits, and other key exports as part of efforts to boost bilateral trade, while concerns mount over potential U.S. tariff hikes on European goods under the Trump administration.
European Commission President Ursula von der Leyen will visit India from Feb. 28 to March 1, accompanied by leaders of EU member nations. The visit comes amid escalating geopolitical tensions, with Brussels and New Delhi set to outline key areas for deeper cooperation under their strategic partnership.
Von der Leyen is scheduled to meet Indian Prime Minister Narendra Modi on Friday, followed by discussions with Trade Minister Piyush Goyal. The next round of trade negotiations is set to take place in Brussels from March 10-14.
Tariff Cuts and Trade Tensions
The EU’s push for lower tariffs comes as Trump has threatened to impose reciprocal tariffs on EU exports starting in early April, raising concerns among Indian exporters over potential disruptions to supply chains and market access.
The EU is India’s largest trading partner, with bilateral trade in goods reaching nearly US$126 billion in 2024, an increase of about 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.
India’s Wine Market Potential
India has long been a strong market for spirits and beer, while 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.
India consumed 6.2 billion liters of alcohol in 2022, but wine accounted for only 37.5 million liters—just 0.6% of total alcohol consumption, according to Euromonitor.
However, the expanding middle class is driving growth in the wine sector, particularly in off-trade sales, which surged during the pandemic. India’s wine market is projected to grow from just under US$197 million in 2022 to more than US$700 million by 2030.
With India’s middle class expected to expand from 31% of the population in 2023 to 60% by 2047, the country is emerging as a significant potential market for wine.
Challenges in India’s Alcohol Tax Structure
Despite the growing demand, India’s tax structure on alcohol remains a major hurdle. The country imposes a 150% federal import tariff on wines, in addition to state-level taxes, which vary widely.
Karnataka, India’s largest wine-consuming state, imposes the highest alcohol tax rate at 83% of the maximum retail price. Delhi, the capital, follows with a 62% tax rate. Goa (49%) and Haryana (47%), two of India’s most alcohol-friendly states, have significantly lower rates.
The ongoing trade talks between Brussels and New Delhi will determine whether the EU can secure greater market access, setting the stage for one of the world’s most promising but challenging wine markets.
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