India and the European Union (EU) on December 8 resume talks on the long-pending free trade agreement (FTA) in New Delhi, as they look to conclude the almost decade-long negotiations by the end of the year.
Discussions will be centered on ironing out remaining gaps on trade in goods and services, investment rules, government procurement and regulatory standards, including sanitary and technical requirements, officials told Moneycontrol.
Carbon tax and market access for automobiles and steel, rules of origin, and barriers in services remain sticking points, officials said ahead of the meeting.
Commerce minister Piyush Goyal will lead the Indian side and Director-General for Trade at the European Commission Sabine Weyand, who is back in Delhi after a month, the EU.
India has raised concerns over the EU’s Carbon Border Adjustment Mechanism (CBAM), which comes into effect from January 1, and could affect exports of steel, aluminium, and other carbon-intensive goods by imposing additional charges based on their carbon footprint.
The previous round, too, was held in the capital from November 3 to 7, with Weyand-led team meeting officials including commerce secretary Rajesh Agrawal.
The EU is India’s second-largest trading partner and a major source of investments and negotiators believe significant ground has already been covered.
According to the commerce ministry, 10 of the 20–plus chapters under negotiation have been officially closed, and another four or five chapters have been “largely decided,” leaving sensitive areas such as automobiles, steel, and regulatory barriers to be resolved.
Why is EU FTA important?
The EU is a major source of foreign investment for India. Bilateral goods trade recently stood at around $136.53 billion (2024‑25).
An FTA would reduce tariffs and regulatory barriers, making Indian exports — including textiles, pharmaceuticals, steel, and electrical goods — more competitive in European markets amid 50 percent tariffs imposed by the United States on India.
India’s ambitious Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) has seen little progress, as global automakers are delaying investment decisions awaiting an outcome of the India–EU FTA, Moneycontrol on December 3 reported. The outcome of the talks could affect the global players’ localisation plans and manufacturing of electric vehicles, depending on the reduction in duties.
What will it mean for bilateral trade?
In its report India and EU: Expanding Future Horizons, the Confederation of Indian Industry (CII) says that trade between EU and India is projected to reach $213.19 billion by 2028.
A 2020 analysis prepared for the European Parliament projected that under a scenario where around 90 percent of tariffs are eliminated (and non‑tariff barriers reduced moderately), exports from the EU to India could rise by 52–56 percent, while imports from India (i.e., Indian exports to the EU) could increase by 33–35 percent.
When did India-EU trade talks begin?
Between 2007 and 2013, India and the EU held multiple rounds of negotiations on a broad-based trade and investment agreement. However, by 2013 the process stalled as the two sides could not bridge differences over market access (tariffs on automobiles, alcohol, and other sensitive products) and other regulatory issues.
After an eight-plus-year pause, the negotiations formally resumed on June 17, 2022. Since then, India and the EU have completed several rounds. By October, they have had 14 round of talks, covering multiple policy chapters.
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