Negotiations between India and the European Union (EU) have entered a crucial phase as negotiators from both sides have commenced talks to resolve outstanding issues in the proposed Free Trade Agreement (FTA). The discussions, which aim to iron out differences before a targeted deadline in December, cover a range of complex topics, including trade in goods and services, rules of origin, and various technical matters.
The EU is India's largest trading partner, accounting for €124 billion worth of trade in goods in 2023, which constitutes 12.2% of India's total trade. India is the EU's 9th largest trading partner, accounting for 2.2% of the EU’s total trade in goods in 2023. A comprehensive FTA could significantly boost economic ties, but several sticking points remain.
Recent talks in Brussels between Commerce Minister Piyush Goyal and European Commissioner for Trade and Economic Security, Maroš Šefčovič, have paved the way for intensified negotiations. Both sides have reaffirmed their commitment to conclude the India-EU FTA by the end of 2025, following the guidance of Prime Minister Narendra Modi and European Commission President Ursula von der Leyen.
Significant progress has been made, with 10 out of 20 chapters of the agreement already finalized and another 4-5 chapters broadly decided. However, several sensitive issues require further discussion. These include the EU's Carbon Border Adjustment Mechanism (CBAM), tariffs on automobiles, and safeguard duties on steel. India is seeking preferential access for its labor-intensive sectors like textiles and leather, while the EU is focused on upholding its climate and regulatory commitments.
The EU's technical team, led by the Director-General for Trade, is currently in New Delhi for further discussions. The aim is to build on the progress made and find constructive solutions to the outstanding issues. Both sides are committed to creating a modern, robust, and future-ready FTA that reflects their respective priorities and sensitivities.
While the initial target was to conclude negotiations by the end of the year, Minister Goyal has emphasized that securing a "good deal" is more important than adhering to deadlines. He noted that both sides are moving ahead, recognizing mutual sensitivities and strengths, as they work to bridge gaps in the remaining areas of the pact.
The successful resolution of these outstanding issues and the finalization of the FTA would mark a significant milestone in India-EU relations, fostering greater trade, investment, and technological cooperation between the two regions.
