Background
India and the European Union have been negotiating a free trade agreement (FTA) for over a decade, with talks stalling for eight years before resuming in 2021. The EU is India’s largest trading partner, with bilateral goods trade reaching $137.5 billion in 2023/24, nearly doubling in the past decade. Progress comes amid renewed global trade turbulence, including sharp hikes in U.S. tariffs on Indian goods last week, which have heightened New Delhi’s urgency to diversify markets.
What Happened?
- Maros Šefčovič, EU Trade Commissioner, will be traveling to New Delhi on Thursday, September 11th, for three days.
- Indian Trade Minister, Piyush Goyal remarked that negotiations between the two parties are making “rapid progress”. Goyal also noted that the next round of talks will be crucial for reaching a consensus.
- Within the deal, the EU is pushing for steep cuts on wines, medical devices, and vehicles, while India seeks to obtain greater access for textiles, steel, pharmaceuticals and petroleum products.
- Following a phone call between Indian Prime Minister Narendra Modi, and European Commission President, Ursula von der Leyen, both sides affirmed they seek to ink the FTA by the end of 2025.
Why It Matters:
A successful agreement would mark one of the EU’s most significant trade pacts in Asia, giving India a platform to diversify exports and hedge against U.S. tariffs while giving Europe greater access to India’s vast consumer market. Beyond economics, the deal fits into broader strategic cooperation, with Brussels emphasizing India’s role in pressuring Russia over Ukraine and laying groundwork for a joint strategic agenda by 2026.
Stakeholder Reactions:
- Piyush Goyal, Indian Trade Minister: “rapid progress” comments in reference to the 8 year stall on the FTA, with talks resuming, albeit at a slow pace in the past 3 years.
- Indian officials: Highlight the opportunity for greater access for export strengths, particularly pharmaceuticals and textiles. FTA would come at a time where New Delhi products are facing heavy U.S. tariffs.
- Ursula von der Leyen, European Commission President: Stressed that “progress is needed now”, echoes the eagerness of Goyal, facing similar supply chain uncertainty with traditional trading partners such as the U.S.
- EU Negotiators: Have prioritized cuts on high value goods, while emphasizing the importance to diversify trade from Asia away from China.
What’s Next?
The next round of negotiations in New Delhi next week will be pivotal to bridging gaps, particularly on agricultural access and industrial tariffs. Both sides aim to conclude the deal by year-end, potentially announcing a roadmap at the planned 2026 EU–India summit. If successful, the FTA would mark a major realignment in India’s trade strategy while strengthening Europe’s engagement with Asia at a time of rising global economic fragmentation.
