India is on the verge of concluding a landmark free trade agreement with the European Union, a deal that would be the largest and most comprehensive trade pact ever negotiated by New Delhi. According to reports, the long-pending trade deal is nearing completion, with a formal announcement expected around the India–EU Summit later this month. New Delhi prepares to host the European Union’s top leadership for India’s 77th Republic Day celebrations and the 16th India–EU Summit on January 27, say reports.
The proposed agreement spans a wide spectrum of goods and services, signalling a decisive step towards deeper economic integration between two of the world’s major economic blocs at a time of shifting global trade alignments. Negotiations on the India–EU free trade agreement were first launched in 2007 but were suspended in 2013 after talks stalled over market access, tariffs and regulatory differences. The negotiations were formally revived in 2022, with both sides committing to an accelerated timetable to conclude one of their most ambitious trade deals.
If finalised, the pact is expected to significantly lower tariffs on key Indian exports such as textiles, apparel, pharmaceuticals, engineering goods and auto components, while granting European companies improved access to India’s large and fast-growing market for automobiles, wines and spirits, medical devices and high-end manufactured products. Beyond goods, the agreement seeks to expand opportunities in services, including information technology, financial services, telecommunications and professional services, areas where India has a competitive advantage and the EU offers scale and capital depth.
From a strategic standpoint, the agreement could help India diversify export markets, reduce reliance on a limited set of trading partners and attract greater investment flows from Europe. For the EU, closer trade ties with India offer a way to strengthen economic engagement with a major growth market amid slowing global demand and geopolitical uncertainty elsewhere. The deal also aligns with India’s broader ambition to integrate more deeply into global value chains and position itself as a trusted manufacturing and services hub.
However, a recent report by the Global Trade Research Initiative has urged caution against expectations of an imminent signing, noting that several critical gaps remain in the negotiations. The report points out that while political intent is strong, differences persist over tariff reductions in sensitive sectors, the EU’s climate-linked trade measures and the extent of market access in services. According to GTRI, these unresolved issues suggest that the agreement, while progressing, may require further rounds of negotiation before it can be concluded.
One of the most contentious areas highlighted by the report is the EU’s carbon border adjustment mechanism, which could raise costs for Indian exports of carbon-intensive products such as steel, aluminium and cement. GTRI has warned that without adequate safeguards or transition arrangements, such measures could erode the competitiveness of Indian manufacturers and act as non-tariff barriers. India has consistently argued that climate-related trade taxes must reflect developmental realities and the principle of common but differentiated responsibilities.
The mobility of services professionals is another area where GTRI sees limited convergence so far. India has been pushing for greater ease of movement, mutual recognition of qualifications and clearer visa pathways for skilled professionals, particularly in IT and other knowledge-driven sectors. The GTRI report notes that labour mobility remains politically sensitive within the EU, constraining the depth of commitments that European negotiators may be willing to make.
Despite these challenges, the overall trajectory of the talks points to sustained engagement on both sides. If successfully concluded, the India–EU free trade agreement could redefine India’s trade relationship with advanced economies and set a template for future negotiations. Yet, as GTRI cautions, the true value of the deal will depend on how effectively it balances market access with climate obligations and delivers tangible gains for India’s goods exporters and services workforce.