Commerce and Industry Minister Piyush Goyal has expressed strong optimism that India and the European Union (EU) are on track to finalize a comprehensive Free Trade Agreement (FTA) before the end of this year. Citing the significant progress made and the complementary nature of both economies, Goyal indicated that while some sensitive issues remain, both sides are dedicated to resolving them amicably.
Negotiations between India and the EU resumed in June 2022, bridging an eight-year gap during which talks had stalled due to disagreements over market access. Since then, multiple rounds of discussions have taken place, with the 11th round concluding in May 2025. These negotiations encompass 23 chapters, addressing a wide array of policy areas including trade in goods and services, investment protection, customs procedures, technical barriers, intellectual property rights, and sustainable development.
A key factor driving the renewed optimism is the recognition that the Indian and EU economies are largely complementary. According to Goyal, there are relatively few areas where the two sides have conflicting opinions. He noted that products and services of interest to India generally do not pose a threat to the EU economy, and conversely, European goods and services are expected to support India's growth story.
In 2024, bilateral trade in goods between India and the EU reached $137.41 billion. The EU is currently India's largest trading partner in goods, accounting for approximately 17% of India's total exports. A successful FTA is anticipated to further enhance India's export competitiveness in key sectors such as ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery.
Both India and the EU are reportedly considering a two-phased approach to finalize the agreement, similar to India's previous trade pacts with Australia. This strategy allows for the early implementation of aspects where consensus is readily achieved, while more complex issues are resolved in subsequent stages. India has also signed a trade deal with the UK and is in advanced talks for an agreement with Oman, which are seen as a move to negate the impact of Trump tariffs by allowing exporters to diversify into other markets.
Despite the overall positive outlook, certain challenges remain. India has expressed concerns regarding EU regulations such as the Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulation (DR). These regulations, which impose carbon taxes on certain imports and restrict agricultural imports from deforested land, could potentially impact Indian exporters. Goyal has affirmed that India will address these concerns during the trade talks, seeking to ensure that the FTA is fair, balanced, and equitable for both sides.
India has also urged the EU to ensure that ongoing FTA negotiations give equal weight to non-tariff barriers (NTBs) and that regulatory frameworks remain inclusive and proportionate and avoid restrictive trade.
The commitment to conclude the FTA by the end of 2025 has been reiterated by both Prime Minister Narendra Modi and European Commission President Ursula von der Leyen. The successful conclusion of the India-EU FTA would represent a significant milestone, strengthening economic ties between the two regions and fostering mutual prosperity. It is expected to drive innovation, boost competitiveness, and encourage investments and cross-border mobility, positioning India as a reliable and attractive destination for global investors. The FTA is also expected to strengthen the supply chain, giving confidence about predictability.
