Full Breakdown
India and EU Intensify Free Trade Agreement Negotiations Amid Global Trade Tensions
9/9/2025, 10:17:04 PM
Upcoming Negotiations and Key Players
India and the European Union (EU) are set to hold the 13th round of negotiations for a Free Trade Agreement (FTA) in New Delhi this week, with a focus on resolving critical issues such as non-tariff barriers, market access, and duties on wine and dairy products. This round follows a recent phone conversation on September 4 between Indian Prime Minister Narendra Modi and EU leaders, including European Council President Antonio Costa and European Commission President Ursula von der Leyen, where they discussed the urgency of concluding the FTA by the end of 2025.
Leading the negotiations are European Commissioner for Trade Maros Sefcovic and Commissioner for Agriculture Christophe Hansen, who will be accompanied by a 30-member team from Brussels. They are scheduled to meet with Indian Commerce Minister Piyush Goyal and Agriculture Minister Shivraj Singh Chouhan.
Progress and Challenges in Negotiations
The FTA talks have made notable progress, with 11 out of 23 chapters already concluded, covering areas such as intellectual property rights, customs and trade facilitation, digital trade, and competition rules. However, significant hurdles remain, particularly regarding agricultural market access and the contentious Carbon Border Adjustment Mechanism (CBAM), which has raised compliance costs for Indian exporters.
The EU has indicated flexibility in its negotiations with the US regarding CBAM, prompting India to seek similar concessions. The Indian industry faces an estimated compliance cost of around INR15 lakh for meeting CBAM requirements, which is set to take effect on January 1, 2026.
Strategic Context and Implications
The urgency of the FTA negotiations is underscored by the backdrop of tariff wars initiated by the Trump administration, which have created a ripple effect in global trade dynamics. The EU is also negotiating trade agreements with other countries, including Indonesia and the UAE, positioning the India-EU FTA as a critical component of its broader trade strategy.
India's trade with the EU reached €124 billion in 2023, accounting for 12.2% of India's total trade. The FTA is seen as a pathway to enhance economic cooperation and reinforce both parties' positions in a multipolar world.
Criticism and Opposition
Despite the momentum, critics highlight the complexities of the negotiations, particularly concerning agricultural products. India has excluded sensitive sectors such as rice, sugar, and dairy from the FTA discussions, while the EU is advocating for greater market access for automobiles and spirits. This divergence reflects the challenges of balancing national interests with the goal of a comprehensive trade agreement.
Official Statements and Future Engagements
External Affairs Minister S. Jaishankar has expressed India's desire for a "decisive conclusion" to the FTA negotiations, emphasizing the importance of the partnership in fostering global stability. The EU is expected to unveil a new strategic vision for its relationship with India on September 17, which will serve as a guiding framework for future cooperation.
Looking ahead, the next round of negotiations is scheduled for early October in Brussels, followed by a series of high-level meetings aimed at solidifying the strategic partnership between India and the EU in various sectors, including technology and defense.
Verbatim Quotes
- “The tariff wars are creating distortion and everyone is interested in figuring out how we can derisk,” — Anonymous Source
- “We are already facing challenges in the US market.” — Pankaj Chadha, Chairman, Engineering Export Promotion Council of India
- “India would like to see its negotiations with the European Union for a free trade agreement move to a 'decisive conclusion' soon.” — S. Jaishankar, External Affairs Minister
The ongoing negotiations represent a critical juncture in India-EU relations, with both sides keen to finalize the FTA amid evolving global trade landscapes.
