India and the European Union are poised to clinch a long-pending free trade agreement (FTA) at the upcoming EU-India Summit in New Delhi on January 27. This potential breakthrough comes after nearly two decades of negotiations, aiming to significantly boost bilateral trade flows and inject momentum into economic relations.
Decades of Negotiation Culminate
Talks on the India-EU FTA first began in 2007, encountered a stall in 2013, and were formally relaunched in June 2022. German Chancellor Friedrich Merz, speaking after talks with Prime Minister Narendra Modi, expressed optimism, stating that negotiations were “close to completion” and that the agreement was crucial for unlocking the full potential of India-EU economic ties. European Commission President Ursula von der Leyen and European Council President António Costa are expected to attend the summit.
Economic Implications and Hurdles
The deal is anticipated to be the EU’s most significant trade agreement with a large emerging economy in over a decade, aligning with Brussels’ strategy to diversify supply chains beyond China and counter rising global protectionism. EU-India goods trade reached €120 billion in 2024. However, sensitive issues like market access, services, public procurement, intellectual property, and sustainability provisions remain points of contention. India has also voiced concerns regarding the EU’s Carbon Border Adjustment Mechanism (CBAM), fearing its impact on exports. Indian Commerce and Industry Minister Piyush Goyal has indicated that negotiations are in the final stages, with outstanding issues narrowing.