Two senior cabinet ministers - External Affairs Minister S Jaishankar and Commerce Minister Piyush Goyal began their new year with the first business trip to Europe. A clear signal from India to deepen both, strategic and economic relations with Europe. . Jaishankar has already expressed his optimism that 2026 will see an upswing in India's ties with Europe. On the economic front, India has already operationalised an FTA with the four-nation EFTA block and signed a comprehensive trade deal with the UK. The next on the agenda is an FTA with the European Union.
Upbeat after inking trade deals with Oman and New Zealand in a span of less than a week, in the new year, India is gearing up to cross the finishing line of yet another trade agreement and unarguably the most important one for the Indian industry - the EU. It is being anticipated that the two sides would announce the conclusion of the deal when European Commission President Ursula von der Leyen and European Council President António Costa visit Delhi to grace the Republic Day event as chief guests.
While technically the trade negotiation with the EU has been going on since 2007, it got renewed impetus in June 2022 when talks resumed after a gap of nearly nine years. The formal trade negotiation was under suspension between May 2013 and June 2022. For India, this is going to be by far the most comprehensive trade agreement as apart from the usual chapters under FTA, this deal would have a bilateral investment treaty and geographical indication as its integral part.
However, the progress of trade negotiation wasn’t very satisfactory till the end of 2024, which caused a serious concern amongst the highest political leadership on both sides. As a result, the talks received a big boost through heavy political lifting in the year 2025. At the beginning of the 2025, President of the European Commission Ursula von der Leyen visited India in February along with the EU College of Commissioners. One of the key outcomes of this visit was strong commitments made to finalise the FTA in 2025.
Following this high-level visit and the clear political diktat given on FTA, the tasks got cut-out for the trade negotiators - to drive the talks with much vigour and make them outcome oriented. This is evident from the fact that during the year 2025 India’s Commerce Minister Piyush Goyal and his EU counterpart Maros Sefcovic met at least ten times in Brussels, New Delhi and on the margins of major multilateral events. Besides, between March 2025 and October 2025, five full trade negotiating rounds were held. This yielded results too – negotiation on 10 out of 24 chapters were concluded.
Adding to this political push was US triggered tariff escalation, which has caused significant disruption in global trade. As the US is the top export destination for India and the EU, both countries have faced adverse impacts on their exports to the world’s largest market. While the EU has gone ahead and signed a trade deal with the US, India is yet to close it despite being the first country to begin the talks. However, the deal faced loud criticism from members of the EU Parliament as the majority of EU goods are subject to a 15 per cent tariff in the US market as against most US goods that are exempt from duties in the EU market. This compelled EU leadership to prioritise the trade deal with India.
In view of heightened political engagement, trade negotiators are trying hard to close as many chapters as possible before the likely announcement of the deal when the EU top leadership would be in Delhi for the Republic Day. Both sides have also demonstrated their strong intent for FTAs, evident from their recent actions. The EU, for instance, signed two important trade deals with MERCOSUR and Mexico, whereas India inked FTAs with the UK, Oman and New Zealand. However, the challenge remains on closing gaps on bilateral investment treaty (BIT), public procurement market access, EU demand on Geographical Indications and a range of issues on sustainability amongst others.
Bilateral investment treaty
BIT was one of the pre-conditions imposed by the EU before resuming talks. The primary difference is over the mechanism to resolve disputes. While India favours the aggrieved party to first resorting to available domestic legal remedy, the EU advocates for a more ambitious multilateral investment court. This disagreement highlights a fundamental difference on to what extent each party perceives the balance between investor rights, national regulatory sovereignty, and the role of international arbitration.
Government procurement
The EU's key demand regarding government procurement is market access, which India has historically resisted due to concerns about protecting domestic industry. Though India has begun opening procurement in recent FTAs like with the UAE and the UK. This is a core sticking point, with the EU seeing India's large procurement market as a major opportunity, while India worries about opening central/ state/ PSU contracts to foreign suppliers, potentially impacting local businesses.
Sustainability and NTBs
Sustainability is another major stumbling block in concluding the deal. Low tariffs in the EU hide the fact that the elephant in the room is their non-tariff barriers (NTBs). These include measures for circularity, energy efficiency, carbon footprint, and sustainable forestry, to list a few. To these have been added some recent sustainability related barriers such as CBAM, that will impose taxes on imports based on carbon emission intensity, Corporate Sustainability Due Diligence Directive (CSDDD) and Deforestation-free Regulation.
Geographical indications
EU in its FTA with Vietnam, MERCOSUR and Mexico, has secured enhanced GI protection for 169, 340, and 336 products respectively, majority of them are agriculture products. India insists that EU GIs follow Indian legal procedures for registration and verification, similar to how Indian products such as Darjeeling Tea undergo scrutiny for GI status in Europe.
Conclusion
This is the most opportune time to conclude this important trade agreement as negotiators from both sides worked hard during 2025 to cover a lot of ground and found the convergence. The blessings of political leaders have given a huge boost to the entire effort. However, the two sides need to move little beyond their defined negotiating stance on investment treaty, politically contentious subjects such as agriculture, digital trade, IPR and ensure conclusion of this much awaited trade agreement. Rest of the market access issues may not pose much problem as already India has a baseline ready with UK deal. However, both sides need to find convergence on the sustainability chapter and the treatment of NTBs.
The author is Chairman Hi-Tech Gears Limited and Former Chairman of NABCB, a constituent of Quality Council of India (Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper) 
 "FTA: India, EU should find convergence on sustainability chapter, NTBs")
