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European Union

EU-India Trade Deal on the Line as EU Imposes Sanctions on India Over Russian Crude Refining

Strategic Insights

— 1 min read

The European Union and India have been working towards a free trade agreement, but recent developments have put this in jeopardy. In July, the EU imposed sanctions on India over its refining of discounted Russian crude, targeting exports of refined petroleum products to Europe. Despite this, experts argue that the real challenge to India comes from the looming US tariffs, which could drive India closer to the EU.

Key Takeaways:

  • The EU's sanctions on India over Russian crude refining are largely symbolic and unlikely to significantly impact India's energy trade or EU-bound exports.
  • The real threat to India comes from the US, which is threatening to impose tariffs of up to 50% on Indian goods.
  • The EU's measured approach during trade negotiations, particularly in the agricultural sector, has made it a more reliable and predictable economic partner for India.
  • The US tariffs could push India to diversify its trade relationships, increasing its interest in finalizing a free trade agreement with the EU.
  • India's relationship with the EU is likely to benefit from the current dynamic, with the EU offering more favorable trade terms than the US.

Statistics:

  • 50%: The maximum tariff threshold the US is threatening to impose on Indian goods.
  • 1.4 billion: The population of India, which relies heavily on domestic energy sources.
  • 44%: The percentage of India's population employed in the agricultural sector.
  • 18th: The number of the EU's sanctions package that includes the sanctions on India over Russian crude refining.

Sources:

  • "EU sanctions on India over Russian energy imports: What it means" by DW News (July 2023)
  • "EU-India trade talks: Can Brussels charm New Delhi?" by European Voice (February 2023)
  • "The Indian Economy and the Geopolics of the 21st Century" by Jacob Funk Kirkegaard of the Bruegel think tank (2022)
  • "The Future of India-EU Trade Relations" by Garima Mohan of the German Marshall Fund of the United States (2022)

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