India and EU close to sealing trade deal, await nod from top Council in Brussels
Prime Minister Narendra Modi, with President of the European Council António Luís Santos da Costa, and President of the European Commission Ursula von der Leyen, during the signing of India-EU FTA at Hyderabad. (ANI File)
THE European Commission on Friday forwarded its proposal for the conclusion of a Free Trade Agreement (FTA) between the European Union and India to the European Council (EC), a clear indication the deal could be officially signed soon.
The European Council defines the general political direction and priorities of the European Union. While the European Commission, the EU’s main executive body, proposes the FTA legislation, the members of the European Council, comprising heads of state or government of the 27 EU member states, the European Council President and the President of the European Commission, take the final decision.
“If authorised by the Council, this will be the largest trade agreement ever concluded by both the EU and India. Once adopted and entered into force, the agreement will improve market access, reduce tariffs, tackle unnecessary trade barriers, as well as provide predictable rules for trade and investment between the EU and India,” the European Union said in a statement.
“With its proposals, the Commission is seeking the Council’s approval to sign the agreements, which will then require the European Parliament’s consent, before conclusion and entry into force. Authorities in India are in parallel going through their own internal ratification procedures,” the statement said.
“The EU and India already trade over Euro 180 billion (1 Euro equals US $1.16) worth of goods and services per year, supporting close to 800,000 EU jobs. This deal will eliminate or reduce tariffs on 96% of EU goods exports to India. Overall, the tariff reductions will save around Euro 4 billion per year in duties on European products. It will make it easier for European companies to access the Indian market and compete on a more level playing field, while it will ensure consumers can benefit from increased choices and more competitive prices,” the statement said.
For India, the FTA will help secure market access for more than 99% of exports by trade value to the EU. Beyond goods, it unlocks high-value commitments in services complemented by a comprehensive mobility framework enabling seamless movement of skilled Indian professionals, India’s Commerce and industry Ministry said.
The ministry said India–EU FTA gives a boost to labour-intensive sectors such as textiles, apparel, leather, footwear, marine products, gems and jewellery, handicrafts, engineering goods, and automobiles bringing down tariffs up to 10% on almost $33 billion of exports to zero on entry into force of the agreement.
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One of the key reasons for India-EU to restart negotiations in 2022 was China’s growing trade surplus. Much like other parts of the world, EU and India import most of their industrial requirements from China. Beijing’s tightening grip on the manufacturing supply chain reflects China’s record trade surplus despite trade friction with the US.
However, New Delhi as well as Brussels have been trying to restrict Chinese products in the strategic sectors. On automobiles, for instance, Brussels in 2024 imposed tariffs up to 35 per cent on Chinese electric vehicles. Similarly, India is opening its automobile sector for developed countries in free trade agreements and continues to impose over 100 per cent duty on imported automobiles from China.
Explained
Why it is a win-win deal
While European companies will get access to the Indian market and compete on a more level playing field, the pact will unlock high-value commitments in services and enable movement of skilled Indian professionals.
In a 2025 report, think tank Delhi Policy Group (DPG) said both India and the EU remain significantly dependent on China. “However, the COVID-19 pandemic in 2020 starkly exposed the vulnerabilities of over-reliance on China-centric supply chains. This has prompted both actors to reassess their dependencies and pursue diversification and de-risking strategies to build more resilient, secure, and sustainable supply chains,” the report said.
India and the EU are also under pressure from the US to reduce its dependence on Chinese products and be used as a transhipment hub. Calling several global manufacturing cities “ugly sister” cities, including the Pune–Gujarat–Chennai industrial corridor, the US, in a report last month, said the US loses when these hubs win.
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“And the longer the system operates unchecked, the harder it becomes to restore lost industrial capacity. Unless addressed with meaningful enforcement, the world’s illegal transhipment hubs will continue to siphon off American manufacturing one product line at a time,” the US report said.
The European Union said once adopted and entered into force, the India-EU agreement will improve market access, reduce tariffs, tackle unnecessary trade barriers, as well as provide predictable rules for trade and investment between the EU and India, the statement said.
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Ravi Dutta Mishra is a Principal Correspondent with The Indian Express, specializing in economic policy and financial regulations. With over five years of experience in business journalism, he provides critical coverage of the frameworks that govern India's commercial landscape. Expertise & Focus Areas: Mishra’s reporting concentrates on the intersection of government policy and market operations. His core beats include: Trade & Commerce: Analysis of India's import-export trends, trade agreements, and commercial policies. Banking & Finance: Covering regulatory changes and policy decisions affecting the banking sector. Professional Experience: Prior to joining The Indian Express, Mishra built a robust portfolio working with some of India's leading financial news organizations. His background includes tenures at: Mint CNBC-TV18 This diverse experience across both print and broadcast media has equipped him with a holistic understanding of financial storytelling and news cycles. Find all stories by Ravi Dutta Mishra here ... Read More
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