India and the European Union are gearing up for the next round of negotiations for a proposed free trade agreement (FTA) in September. The talks will take place in India. This development follows the 12th round of negotiations held in Brussels last week, where both sides exchanged offers related to the services sectors.

L Satya Srinivas, Special Secretary in the Department of Commerce, said that the discussions in Brussels also covered key interests related to market access for goods. The upcoming round in September will build on these discussions.

India and the EU had resumed negotiations for a comprehensive FTA in June 2022, after a gap of over eight years, with talks stalling in 2013 due to differences in the level of market opening. In late February 2025, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen expressed their commitment to finalize the free trade deal by the end of this year.

The EU is seeking significant duty cuts in automobiles and medical devices, as well as tax reductions in products like wine, spirits, meat, and poultry. They are also advocating for a strong intellectual property regime. On the other hand, India is expected to push for enhanced competitiveness for its goods exports to the EU, including ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery.

The India-EU trade pact negotiations encompass 23 policy areas, including trade in goods, trade in services, and investment. More than half of the FTA chapters are agreed upon, and nearly 90% of market access issues are settled. The remaining sticking points primarily involve non-tariff barriers such as technical and regulatory roadblocks like safety standards and visa rules. For instance, Indian goods like chillies, basmati rice, tea, and dairy face strict EU limits, while the EU is pressuring India to reduce its tariffs on cars, whiskey, and wine, which currently range from 100% to 150%. Negotiators are also working on services and rule-of-origin clauses.

The EU is India's largest trading partner for goods, with bilateral trade almost doubling over the past decade. In 2024-25, India-EU merchandise trade reached approximately $136–$137 billion, making the EU the top export destination for Indian goods. EU companies have already invested over $117 billion in India, primarily in sectors like automobiles, electronics, and financial services.

If the FTA is concluded successfully, it is expected to provide better access to European markets for Indian farmers while boosting India's EV and auto parts exports. It could also lead to increased investment flows between the two regions.