India–EU Trade Pact Enters Final Stretch as Negotiators Push for Breakthrough Ahead of Summit

A long‑awaited milestone in global trade diplomacy is now within reach, as India and the European Union move into the final phase of negotiations for what both sides describe as one of the most ambitious free trade agreements in their histories. After nearly two decades of intermittent talks, the India–EU Free Trade Agreement (FTA) is now “on the cusp of completion,” according to senior officials from both blocs.

A Landmark Deal Years in the Making

European Commission President Ursula von der Leyen described the agreement as the “mother of all deals,” noting that it would create a combined market of nearly 2 billion people and account for almost one‑quarter of global GDP.

High‑Level Diplomacy Intensifies

In recent weeks, Commerce and Industry Minister Piyush Goyal and EU Trade Commissioner Maroš Šefčovič held a two‑day “marathon” round of talks in Brussels, narrowing gaps on several contentious issues and injecting political momentum into the final stretch of negotiations.

Both sides are aiming to substantially agree ahead of the India–EU Summit scheduled for January 27, 2026, where EU leaders Ursula von der Leyen and Antonio Costa will be present in New Delhi as chief guests for India’s Republic Day celebrations.

Diplomatic sources indicate that the summit may witness a formal announcement of the conclusion of negotiations, followed by legal scrubbing and ratification processes within the EU and India.

Key Sticking Points Remain

Despite strong progress, several sensitive issues continue to challenge negotiators:

1. EU’s Carbon Border Adjustment Mechanism (CBAM)

India has raised concerns about the impact of the EU’s carbon tax on steel, cement, and other carbon‑intensive exports. Both sides are working toward a “compromise solution,” though the EU has maintained its principled stance on CBAM.

2. Market Access for Automobiles and Dairy

The EU seeks deeper access to India’s automobile and dairy markets, while India is pushing for safeguards to protect domestic industries.

3. Mobility for Skilled Professionals

India is seeking a more liberal framework for the movement of IT and other skilled workers—an area where the EU has shown openness but not yet full alignment.

4. Steel Import Quotas

India continues to negotiate for more predictable and less restrictive steel export conditions under the new EU regulatory environment.

Economic Stakes for Both Sides

The EU is India’s largest trading partner, with bilateral goods trade reaching USD 136.53 billion in 2024–25. Services trade, driven heavily by India’s IT sector, adds another significant layer to the relationship.

Benefits for India

• Lower tariffs on textiles, pharmaceuticals, machinery, and electronics
• Greater integration into European supply chains
• Diversification away from US tariff volatility and Chinese market dependence

Benefits for the EU

• Expanded access to India’s fast‑growing consumer market
• Increased exports of aircraft parts, chemicals, machinery, and high‑value services
• A strategic partnership with a stable, democratic Indo‑Pacific power

Geopolitical Context

The push to finalize the FTA comes amid global trade disruptions, including tariff unpredictability from the United States and ongoing conflicts affecting supply chains. For Europe, the deal is part of a broader strategy to strengthen ties with trusted partners. For India, it represents a major step toward becoming a central node in global manufacturing and services networks.

What Happens Next

If negotiators bridge the remaining gaps in the coming days, the India–EU Summit could mark the formal conclusion of the FTA negotiations. The agreement would then move to legal review, followed by approval from the European Parliament, the European Council, and India’s Cabinet before signing and implementation.

Officials on both sides remain cautiously optimistic. As Šefčovič noted after the latest round of talks, the “open issues are narrowing,” and both sides are moving “full steam ahead” toward a balanced and mutually beneficial agreement.