India, EU near FTA finish line, aim to close talks at January 27 summit

India and the European Union are in the final and most difficult phase of free trade agreement talks, with both sides aiming to announce the conclusion at the India-EU Summit in New Delhi on January 2

India and the European Union (EU) continue to hold intense negotiations on the proposed free trade agreement (FTA), including thorny issues such as sustainability, and are aiming to announce the conclusion of the talks at the India-EU Summit in New Delhi on January 27.

 

What happens after the India-EU FTA talks conclude?

 

Once the negotiations are concluded, both sides will follow their internal approval processes before moving towards signing the agreement, an EU official said, adding that the proposed pact aims at a “substantial reduction of tariffs” on both sides.

 

Why is the proposed trade deal strategically important?

 

 

The proposed trade deal is seen as part of a broader strategy to diversify trade ties and reduce reliance on a limited number of supply sources. The idea is also to boost investment and industrial cooperation in key sectors such as active pharmaceutical ingredients (APIs), solar equipment and hydrogen. Both sides want to jointly build industrial capacity and cut dependencies, the official added.

 

How close are India and the EU to clinching the deal?

 

“As (European Commission) President Ursula von der Leyen said in Davos as well, we’re closing in on a deal, and that’s more than 20 years after we first started these negotiations. Following (the deal with) Mercosur, this would be another major and very strategic agreement,” the EU official said.

 

“A free trade agreement between India and the EU would create one of the largest trading areas in the world, a market of around 2 billion people. It would mean more predictability, better market access for companies, and that, of course, would support trade, would support growth and jobs, and it would also help diversify supply chains and reduce unwanted dependencies.”

 

What issues remain unresolved in the negotiations?

 

Over the last three months, New Delhi and Brussels have been in the “last and the most arduous” leg of the negotiations. Last week, Commerce Secretary Rajesh Agrawal had said that as many as 20 out of 24 chapters had been concluded. The agreement will cover all aspects of the deal, but “sensitive” agriculture issues on “both sides” are off the table.

 

How significant is the EU as a trade partner for India?

 

The EU is India’s largest trading partner, and India’s bilateral trade in goods with the bloc stood at $136.53 billion in FY25, with exports worth $75.85 billion and imports of $60.68 billion.

 

What else is on the agenda for the India-EU Summit?

 

Apart from the FTA, during the India-EU Summit — which will take place after a gap of five years — a security and defence partnership remains another key deliverable.

 

Both sides are also looking to conclude a memorandum of understanding (MoU) on a comprehensive framework on mobility, covering high-skilled workers and students, researchers and seasonal workers. The framework will include measures to ease movement, while allowing member states to decide how many people they admit. “The idea here really is to better support Indian talent coming to Europe, and of course, in line with what the labour market needs in the European Union,” the official said.

 

What role does IMEEC play in India-EU engagement?

 

There will also be a focus on the India–Middle East–Europe Economic Corridor (IMEEC), which aims to create new transport, digital and energy connections between India and Europe. “Of course, that involves other partners as well, but we do expect that the summit would inject some momentum into the preparatory work,” the official said.

 

Who will attend the India-EU Summit in New Delhi?

 

On January 27, the President of the European Council, António Luís Santos da Costa, and the President of the European Commission, Ursula von der Leyen, will co-chair the 16th India-EU Summit along with Prime Minister Narendra Modi.

 

Why is the FTA crucial for India at this juncture?

 

For New Delhi, a trade deal with the 27-nation European bloc is crucial amid India-United States trade negotiations having dragged on and India exploring new export markets after the White House imposed a 50 per cent additional tariff on its exports. Apart from the economic benefits, the EU — especially its largest members such as Germany and France — is keen to wean India off Russian influence. Both New Delhi and the European bloc are hopeful that the deal will help reduce their mutual dependence on China.