After several years of negotiations, 20 out of 24 chapters in the India-EU free trade agreement have been finalized. The aim is to conclude the deal before the EU leaders' visit to India this month, making it India's largest FTA. This pact would boost bilateral trade, though sensitive issues remain to be addressed.
Negotiations for the India-EU free trade agreement (FTA) have been ongoing for several years and are now nearing a close. Twenty out of the 24 chapters have been finalized. According to reports, the goal is to wrap up the deal before the visit of European Council President António Luís Santos da Costa and European Commission President Ursula von der Leyen to India this month. These leaders will be chief guests at the 77th Republic Day celebrations.
India and the EU share strong bilateral trade ties. Merchandise trade stood at around €120 billion in 2024, while services trade was €59.7 billion in 2023. The EU is also a major source of investments into India. The FTA would further ease market access and provide a boost to trade on both sides. However, sensitive sectors such as automobiles and alcohol need careful handling.
The EU's carbon border adjustment mechanism (CBAM), effective from January 1, will affect India's carbon-intensive exports like steel and aluminium. The final agreement must address India's concerns on this. Additionally, there is a need to expand pathways for skilled Indian professionals to move to the Eurozone. Reports indicate that India's red lines have been accepted, with contentious agricultural issues set aside.
In recent years, India has signed trade pacts with Australia, the UAE, and the UK, easing market access. With US talks dragging, an EU deal would open doors to one of the world's largest economic blocs. India's merchandise exports from April to December 2025 reached $330.29 billion, a 2.4 percent increase from $322.41 billion in the same period last year. India should continue pushing for a US agreement alongside this.
