India-EU trade talks accelerate amid global tensions

September 8, 2025 Hot from the Oven Valli Sarvani

Amid rising global trade tensions and strategic shifts, India and the European Union (EU) are intensifying efforts to finalise the long-pending Free Trade Agreement (FTA).

Days after Prime Minister Narendra Modi held talks with top EU leaders, two key EU Commissioners, Maros Sefcovic (Trade) and Christophe Hansen (Agriculture), are arriving in Delhi this week to lead high-level negotiations.

This marks their first visit since February, with a 30-member EU team set to meet Indian counterparts, including Commerce Minister Piyush Goyal and Agriculture Minister Shivraj Singh Chouhan.

The primary aim is to resolve long-standing issues and fast-track the deal’s conclusion, ideally by year-end.

The urgency comes as India and the EU face the fallout of unilateral trade moves by the United States, especially its steep tariffs on steel and aluminium.

In contrast, the EU has offered flexibility to the US under the controversial Carbon Border Adjustment Mechanism (CBAM), a point India now intends to challenge.

Delhi is expected to push for similar concessions under CBAM, which could severely impact Indian exporters.

MSMEs, in particular, face steep compliance costs, estimated at ₹15 lakh annually, just to meet CBAM norms.

Indian officials argue that if exceptions were made for the US, India deserves equitable treatment.

So far, negotiations have concluded on 11 of the 27 FTA chapters. These include digital trade, intellectual property, dispute settlement, and SME support.

Progress in the digital chapter is critical for India’s service sector, especially in areas like data flows and online commerce.

However, agriculture remains one of the thorniest issues. EU Commissioner Hansen’s visit is seen as crucial, especially as both sides have agreed to exclude dairy, rice, and sugar from talks, historically sensitive items for India.

The broader context includes the EU’s active trade discussions with other Asian economies like Indonesia and the UAE.

But with trade between India and the EU already at €124 billion in goods and €59.7 billion in services, both sides see strategic value in sealing the deal soon.

The goal: a comprehensive agreement by year-end, ahead of the India-EU leaders’ summit in early 2026.

Image from Pxhere (Free for commercial use / CC0 Public Domain)

Image Published on January 19, 2017