Negotiators from India and the European Union have moved into the final stretch of talks on a long-pending free trade agreement that both sides now describe as a strategic necessity, as uncertainty over United States trade policy reshapes global supply chains and export strategies. Officials involved in the discussions say most market-access chapters are broadly settled, with remaining work focused on sensitive tariff lines, regulatory safeguards and timelines for implementation.
The proposed pact, under negotiation for more than a decade with several pauses, has regained momentum over the past two years as Brussels and New Delhi seek to reduce exposure to external shocks. For the European Union, diversifying trade ties beyond the US and China has become an explicit policy goal. For India, securing preferential access to one of the world’s largest consumer markets offers a counterweight to potential tariff pressures elsewhere.
Trade specialists say the structure of the deal reflects this shared urgency. India is expected to secure phased tariff reductions on a wide range of labour-intensive exports, including textiles, apparel, leather goods, footwear, gems and jewellery, and certain engineering products. These sectors employ millions and are among the most exposed to changes in external demand. Ajay Srivastava, a former trade official, has said that improved access to the EU market would help exporters partly offset the impact of higher duties or restrictive measures imposed by the US on selected product categories.
European manufacturers, in turn, are seeking lower tariffs and clearer rules for automobiles, high-end machinery, wines and spirits, medical devices and chemicals. Current import duties on some of these products remain among the highest faced by EU exporters in major economies. Brussels has also pressed for stronger commitments on intellectual property protection, government procurement and regulatory transparency, areas that have historically slowed progress.
People familiar with the talks say negotiators have narrowed differences on goods tariffs by agreeing to longer transition periods for politically sensitive items, allowing domestic industries time to adjust. Agriculture remains a delicate chapter, with India resisting broad concessions on dairy and certain farm products, while offering limited quotas and safeguards to protect small producers. The EU has signalled flexibility, recognising the social and political weight of agriculture in India’s economy.
Beyond goods, services and investment provisions are central to the pact’s commercial value. India is pushing for easier movement of professionals in information technology, engineering and healthcare, alongside mutual recognition of qualifications. European counterparts are cautious, balancing labour-market concerns with industry demands for skilled talent. Investment protection rules are also under discussion, with both sides aiming to avoid disputes that have characterised earlier bilateral treaties.
Geopolitics has added another layer to the negotiations. Heightened trade frictions involving the US have reinforced the case for dependable partners and rules-based commerce. European policymakers increasingly view India as a key pillar in their Indo-Pacific strategy, while New Delhi sees the EU as a stable market that complements its manufacturing and export ambitions. The alignment is evident in parallel talks on a separate investment protection agreement and a framework for cooperation on sustainable development.
Environmental and labour standards have emerged as important, though contentious, elements. The EU has sought binding commitments linked to climate goals and workers’ rights, consistent with its newer trade agreements. India has pushed back against provisions it views as intrusive or misaligned with domestic development priorities, arguing for cooperation rather than enforcement-driven clauses. Compromise language is being explored to bridge these positions without derailing the broader deal.
Economists note that the scale of potential gains is significant, though uneven across sectors. The EU is already one of India’s largest trading partners, with bilateral goods trade running into tens of billions of euros annually. A comprehensive agreement could lift trade volumes further by lowering costs, improving predictability and encouraging investment flows. Export-oriented clusters in states with strong manufacturing bases are expected to be among the main beneficiaries.
Industry groups on both sides have stepped up engagement, urging negotiators to maintain momentum. Indian exporters highlight the risk of losing market share to competitors that already enjoy preferential access to the EU. European businesses argue that delayed agreement leaves them at a disadvantage in a fast-growing market with rising consumer demand and infrastructure spending.
