India, EU Close to Finalising Long-Awaited Free Trade Agreement

India and the European Union are close to concluding a long-negotiated Free Trade Agreement (FTA), with an official announcement expected during the India–EU Summit in New Delhi on Tuesday, according to sources familiar with the matter.

The deal comes at a time when global trade is becoming increasingly protectionist, making the agreement strategically significant for both sides.

Ratification and Scope

Once signed, the pact will require ratification by the European Parliament, a process that could take at least a year. Recent legal challenges to the EU–South America trade agreement, however, highlight how parliamentary hurdles could delay or complicate approval.

Investment protection and geographical indications will be negotiated separately, narrowing the FTA’s focus to goods, services and trade rules.

Why the Deal Matters Now

The agreement would be India’s ninth trade pact in four years, reflecting New Delhi’s push to secure market access amid rising global tariffs, including higher U.S. duties.

For the European Union, the deal supports supply-chain diversification away from China and provides deeper access to India’s fast-growing $4.2 trillion economy.

Gains for India

The EU is one of India’s top trading partners alongside the United States and China.
Total bilateral trade in goods and services exceeded $190 billion in 2024/25.

• Indian exports to the EU:

  • Goods: about $76 billion

  • Services: about $30 billion

While average EU tariffs are relatively low at 3.8%, labour-intensive sectors such as textiles and garments face duties of around 10%.

The FTA could help India regain competitiveness lost after the EU began withdrawing Generalised System of Preferences (GSP) benefits in 2023 and offset the impact of higher U.S. tariffs.

India is also seeking easier access for IT services and greater mobility for its professionals.

Gains for the EU

EU exports to India face a weighted-average tariff of around 9.3%.
In 2024/25, the EU exported goods worth $60.7 billion to India.

Tariffs are particularly high on automobiles, auto parts, chemicals and plastics. Tariff reductions would open opportunities in cars, machinery, aircraft and chemicals, while improving access to services, procurement and investment.

Key Sticking Points

• Agriculture and dairy are excluded

• India is resisting EU demands to eliminate tariffs on more than 95% of goods, signalling closer to 90%

• Autos, wine and spirits remain sensitive, with India favouring phased cuts or quotas

What Comes Next

Analysts say geopolitical pressures and trade disruptions have pushed both sides toward a pragmatic compromise. Whether the agreement delivers balanced gains will depend on how carbon levies, services mobility and non-tariff barriers are ultimately addressed.