India, EU wrap up free trade deal negotiations after 18 years
India and the European Union have concluded official-level negotiations for a long-pending free trade agreement, paving the way for expanded trade, duty-free access for key sectors and deeper economic integration, with a formal announcement expected at the India-EU Summit
New Delhi: India and the European Union (EU) have concluded official-level negotiations for the proposed free trade agreement which will help boost two-way commerce and strengthen economic ties between the two sides, Commerce Secretary Rajesh Agrawal said on Monday.
“Official-level negotiations are being concluded and both sides are all set to announce the successful conclusion of FTA talks on January 27, Tuesday,” the Commerce Secretary said.
He said the trade deal from the Indian perspective is balanced and forward-looking, which will help in better economic integration of India with the EU.
It will propel trade and investments in both economies, he said.
“Negotiations have been successfully concluded. The deal has been finalised,” Agrawal said.
Legal scrubbing of the FTA text is underway and the endeavor will be to complete the processes and sign the pact at an early date, he said.
The deal is expected to be signed this year, and it may come into effect early next year. Implementation of the deal takes time, as it requires approval from the EU Parliament. In India, it requires only the nod of the Union Cabinet.
The pact is finalised after 18 years of negotiations. The talks started in 2007.
Commerce and Industry Minister Piyush Goyal has termed this free trade agreement (FTA) “the mother of all deals” the country has signed so far.
The conclusion of talks for the agreement will be announced formally in the India-EU (European Union) Summit here on Tuesday.
European Commission President Ursula von der Leyen and President of the European Council Antonio Costa will hold summit talks with Prime Minister Narendra Modi on January 27.
The pact is likely to provide duty free access to a number of Indian goods from labour intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather and footwear.
The EU’s tariffs on Indian goods are about 3.8 per cent, but labour-intensive sectors attract about 10 per cent import duty. India’s weighted average duty on EU goods is about 9.3 per cent, with particularly high duties on automobiles, parts (35.5 per cent), plastics (10.4 per cent), and chemicals and pharmaceuticals (9.9 per cent).
In an FTA, two sides reduce or eliminate import duties on over 90 per cent of goods traded between them. An FTA also liberalises norms to promote trade in services sectors such as telecommunications, transportation, accounting, and auditing. The NDA government has finalised seven trade pacts since 2014: Australia, the UK, Oman, New Zealand, the UAE, the EFTA bloc, and Mauritius.
This pact is important, as the US’ imposition of high tariffs has disrupted global trade flows. India is facing steep 50 per cent tariffs. The FTA is expected to help Indian exporters diversify their shipments. It will also help reduce dependence on China.
Besides FTA, the two are also negotiating a pact in investment protection and Geographical Indications (GI). The India-EU FTA covers 24 chapters, including trade in goods, services and investment.
India’s bilateral trade in goods with the EU was USD 136.53 billion in 2024-25 (exports worth USD 75.85 billion and imports worth USD 60.68 billion), making the EU India’s largest goods trading partner. The services trade in 2024 was USD 83.10 billion.
India has a trade surplus of USD 15.17 billion in 2024-25.
The EU market accounts for about 17 per cent of India’s total exports, and the bloc’s exports to India constitute 9 per cent of its total overseas shipments.
As per reports, the EU, with a GDP of about USD 20 trillion and a population of over 450 million, is the major global trade player, exporting about USD 2.9 trillion and importing more than USD 2.6 trillion annually.
India, with a population of 1.4 billion, exported USD 437 billion in goods and USD 387.5 billion in services. It imported goods worth USD 720 billion and services worth USD 195 billion in 2024-25.
India’s major goods exports to EU in FY2025 included petroleum products (USD 15 billion); electronics (USD 11.3 billion – smartphone USD 4.3 billion); textiles (USD 1.6 billion – garments USD 4.5 billion); machinery, computer (USD 5 billion); organic chemicals (USD 5.1 billion); iron and steel (USD 4.9 billion), gems and Jewellery (USD 2.5 billion); pharma (USD 3 billion); auto parts (USD 1.6 billion); footwear (USD 809 million); and coffee (USD 775 million).
The main imports included machinery, computer (USD 13.0 billion); electronics (USD 9.4 billion – mobile phone parts-USD 3.7 billion, ICs USD 890.5 million); aircraft (USD 6.3 billion); medical devices, scientific instruments (USD 3.8 billion); gems and jewellery (USD 3 billion – rough diamonds USD 1.7 billion); organic chemicals (USD 2.3 billion); plastics (USD 2.3 billion).
India’s key services exports to the EU were other business services, telecommunication and IT, and transportation services. Imports included intellectual property services, telecommunication and IT.
