India and the European Union have reignited momentum in their long-standing Free Trade Agreement (FTA) negotiations. The next round of India-EU trade talks has kicked off in New Delhi and will continue till May 16. Both sides are pushing for a meaningful first phase of the FTA amid rising global trade shifts.
India seeks better access for key exports like pharmaceuticals and textiles, while the EU aims for tariff reductions on cars, wine, and agri-products. With trade in goods reaching €124 billion in 2023, this strategic dialogue is expected to reshape India’s global trade footprint.
What’s at Stake for India? Unlocking Exports and Market Access
India’s main ask is clear—greater market access and lower tariffs on critical sectors like pharmaceuticals, textiles, apparel, and digital services. These sectors fuel India’s economic engine and employ millions. Moreover, with digital services forming a third of India-EU service trade, India is eyeing a bigger share of the European digital economy.
The FTA, once concluded, could significantly reduce non-tariff barriers and create a smoother pathway for Indian exporters. This becomes even more important as global supply chains shift post-pandemic, and India positions itself as a reliable alternative to China.
What the EU Wants: Tariff Cuts and Trade Transparency?
On the flip side, the EU is pushing India to lower import duties on automobiles, alcoholic beverages like wine and whiskey, and specific agricultural goods. These have long been contentious points, with India’s high tariffs often seen as barriers by European companies.
However, Indian policymakers remain cautious about the impact such concessions may have on domestic manufacturers and farmers. Balancing foreign trade with local interests is at the heart of India’s negotiation stance.
Why Now? Timing, Strategy, and Global Trade Dynamics
This renewed push for an FTA comes as India and the EU look to strengthen economic resilience. With geopolitical uncertainties and a shifting global economic order, both economies are working to build trusted, diversified supply chains.
A productive meeting between India’s Commerce Minister Piyush Goyal and EU Commissioner Maroš Šefčovič on May 1 further confirmed the shared resolve to close the deal by end-2025. The roadmap aligns with the strategic vision of PM Modi and EU Commission President Ursula von der Leyen.
What Lies Ahead: Inclusive Growth and Sustainable Trade
Beyond just trade volumes, the FTA promises to drive inclusive growth, boost innovation, and support sustainable development. With almost €60 billion in services traded in 2023—double that of 2020—the digital economy and cross-border investments are key areas of interest.
The agreement also aims to ease mobility of professionals, strengthen intellectual property rights, and enable climate-smart trade practices. Both parties are working to iron out the final differences with pragmatism and mutual respect, ensuring a win-win deal by the 2025 deadline.
Disclaimer: The views and investment insights provided here are based on publicly available information and do not constitute financial advice. Readers are advised to conduct their own research or consult certified financial experts before making investment decisions.
