A Free Trade Agreement (FTA) between India and its largest trading partner, the European Union (EU), may soon become a reality, as Commerce and Industry Minister Piyush Goyal has indicated that there is “every possibility that we are getting a good deal by 27th January,” when EU leadership is expected to meet India’s Prime Minister Narendra Modi in New Delhi. Stating that not a single EU member state is opposed to a trade partnership with India, the Minister said that the potential FTA will be the “mother of all deals” signed since 2014. Seven FTAs signed by India after 2014 include those with Mauritius, Australia, UAE, European Free Trade Association (EFTA), the UK, Oman, and New Zealand.
Highlighting that each of the 27 EU states, at different times over the past few months, has conveyed support for an FTA with India, the Minister said that trade is reasonably balanced in both goods and services and holds huge opportunities for growth. He reiterated that India is offering a “super deal” to the EU in their sectors of interest, and vice versa, describing an enhanced trade partnership as a win-win prospect for both sides.
Yesterday, India’s Commerce Ministry indicated that India-EU negotiations are underway virtually on a day-to-day basis, with 20 out of 24 chapters completely closed. Stating that the talks are already in the last and most arduous leg over the past three months, the Ministry said that both sides are making efforts to close discussions before their respective leaders meet later this month, adding that any announcement of an FTA will depend on how the talks progress. The Ministry clarified that sensitive agricultural issues on both sides are already off the table.
Government sources had earlier indicated that both sides are holding talks on the Carbon Border Adjustment Mechanism (CBAM), Geographical Indications (GI), critical minerals, intellectual property rights (IPR), and several other trade and regulatory issues.
Both sides are understood to have exchanged their respective lists for a likely deal on trade of GI-tagged products, even as separate negotiations continue for an FTA and an investment protection pact. India defines GI-tagged goods as those “originating from a specific location and having distinct nature, quality, and characteristics linked to that location.”
Sources indicated that the EU wants no restrictions on the export of critical minerals from India through any duties. Recently, the EU challenged Indonesia’s ban on nickel exports at the WTO (World Trade Organization).
Sources further pointed out that India is expected to seek carve-outs or exemptions for exports of stainless-steel products to the EU, in view of raised duties on imports by the bloc. India’s Ministry of Commerce and Industry has already held meetings with stakeholders from the auto and steel sectors. The EU has proposed CBAM’s expansion to 180 downstream goods, with CBAM certificates slated to be sold from 1st February 2027 for goods imported in 2026.
The EU is India’s largest trading partner, with bilateral goods trade reaching $137.5 billion in FY 2023-24. While India is looking to export more labour-intensive goods to the EU with increased market access, the EU aims to export more automobiles and liquor to India. Both sides have already completed 14 rounds of negotiations.
