India and the European Union (EU) have made meaningful progress in talks for a free trade agreement (FTA), with negotiators resolving some differences and preparing for another round of discussions in New Delhi in September. Officials say both sides remain committed to concluding an interim deal as a step towards a comprehensive pact by the end of 2025.
Progress in 12th Round of Talks
The latest, twelfth round of negotiations took place in Brussels last week, where India and the EU exchanged proposals on reducing trade barriers across goods and services.
“We wrapped up the twelfth round on Friday,” said L. Satya Srinivas, Special Secretary in India’s Department of Commerce, speaking to reporters on Tuesday, 15 July. “We’ve put forward our offers on both services and non-services sectors. We also tackled significant issues concerning market access for goods.”
Sec. Srinivas, who leads India’s negotiating team, indicated that discussions helped bridge some gaps on previously contentious topics. “In earlier rounds, we managed to close several chapters. This time, we found common ground on some divergent issues as well. Overall, it was a productive round covering numerous sectors,” he said.
September Talks to Take Place in Delhi
The next, thirteenth round of negotiations is expected in the first week of September in New Delhi. Officials suggest intensive work will continue in the interim, both virtually and in-person, to sustain momentum.
Negotiations between India and the EU resumed in June 2022 after being stalled for nearly a decade due to disagreements over market access and trade rules.
High-Level Push from Leaders
Efforts to accelerate the FTA received a boost on 28 February 2024, when Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen held discussions and agreed to aim for concluding a much-anticipated free trade agreement by the end of this year. President Von der Leyen, who has been serving as the European Commission President since December 2019, has emphasized closer economic and strategic ties with India as part of the EU’s broader Indo-Pacific strategy.
Key Issues on the Table
Several contentious issues remain unresolved. According to officials familiar with the discussions, India is seeking a three-year moratorium on the EU’s proposed Carbon Border Adjustment Mechanism (CBAM), particularly to shield its micro, small, and medium enterprises (MSMEs) from additional compliance costs.
Meanwhile, the EU is pressing for substantial tariff reductions and greater market access for its exports, including automobiles, medical devices, wine, spirits, meat, and poultry. The bloc is also seeking stronger intellectual property protections as part of the pact.
Potential Benefits for Indian Exports
Trade experts note that a successful agreement could significantly boost India’s exports to Europe, improving competitiveness for sectors such as garments, pharmaceuticals, steel, petroleum products, and electrical machinery.
The FTA negotiations span 23 policy areas, including trade in goods and services, investment, sanitary and phytosanitary measures, technical barriers to trade, customs and trade facilitation, competition policy, government procurement, dispute settlement, intellectual property rights, geographical indications (GIs), and sustainable development.
Growing Economic Ties
The EU is India’s largest trading partner in goods. Bilateral trade in goods reached $137.41 billion in 2023-24, with Indian exports valued at $75.92 billion and imports at $61.48 billion. The EU accounts for about 17% of India’s total exports. Bilateral trade in services was valued at $51.45 billion in 2023.
