Negotiators are weighing a model similar to the India-UK pact, which eliminated tariffs on nearly all Indian agricultural exports, the people cited above said on the condition of anonymity. India is also considering concessions such as lowering duties on European whisky and opening parts of government procurement to EU firms.
“India is also expected to secure tariff relief on labour-intensive exports, including textiles, gems and jewellery, agricultural goods, and engineering products,” said the second person mentioned above, who didn’t want to be named. “Most of the issues are likely to be finalized during the meeting between the two leaders (Piyush Goyal and Maroš Šefčovič), and if something remains, another round of talks will be scheduled to fast-track this free trade agreement (FTA),” said the second person.
Commerce minister Goyal meets Šefčovič, the EU commissioner for trade and economic security, on Friday, even as a 28-member team from the EU’s Political and Security Committee holds parallel consultations in New Delhi. The delegation includes EU’s Chair Ambassador for Political and Security Committee, Delphine Pronk and 27 EU member states’ ambassadors based in Brussels.
The India-UK trade agreement envisages London providing duty-free access for Indian-made EVs, while New Delhi will gradually reduce tariffs on high-end UK-made EVs. In the agricultural sector, the pact gives Indian farm goods like spices, processed foods, and seafood duty-free access to the UK market while India maintains protections for its own domestic dairy, edible oils and apples.
Between India and the EU, More than 20 policy areas are under discussion, including goods, services, investment protection, customs, intellectual property and sustainable development. The talks come at a time of New Delhi’s strained trade relations with Washington, after US president Donald Trump imposed 50% duties on a wide range of Indian goods, including a punitive levy of 25% for India’s Russian ties.
Indian negotiators are also pressing for exemptions from the EU’s Carbon Border Adjustment Mechanism, citing concerns over its potential burden on the domestic industry, the people mentioned above added. The 13th round of India-EU FTA negotiations began last Monday, and is currently underway in the national capital.
Spokespersons of the commerce and external affairs ministries, and the EU Commission didn’t respond to emailed queries.
India and the EU aim to conclude the FTA by year-end, a deal that could give Indian exporters a stronger foothold in European markets amid mounting global trade headwinds.
The EU is India’s second-largest trading partner, accounting for trade in goods worth €120 billion in 2024, or 11.5% of India’s total trade. India is the EU’s ninth largest trading partner, accounting for 2.4% of the EU’s total trade in goods in 2024, behind the USA (17.3%), China (14.6%) and the UK (10.1%), according to European Commission data. However, trade in goods between the EU and India has increased by almost 90% in the last decade.
The EU’s stringent environmental rules, including its carbon tax, deforestation regulations, and supply chain due diligence laws, have emerged as a major sticking point in negotiations for a proposed trade pact with India, as they could raise compliance costs for Indian exporters, economic think tank Global Trade Research Initiative (GTRI) said in a report.
Under the Carbon Border Adjustment Mechanism (CBAM), Indian exports of steel, aluminum, and cement to the EU could face tariffs of 20-35%, even if an FTA is signed, the report added.
Meanwhile, industry groups and exporters are closely following the developments.
The India-EU FTA can be a game changer for the textile and apparel sector, said Prabhu Dhamodharan, convenor of the Indian Texpreneurs Federation, a prominent Coimbatore-based textile industry association, noting that while the EU imports $85–90 billion worth of apparel annually, India’s share stands at just 6%.
“With duty-free access, India can raise this to 10% in the first phase, directly competing with Bangladesh, which already enjoys zero duty. At the same time, EU economies are consciously reducing their dependence on China, as trade deficits with China widen due to dumping practices,” he said.
“With focused efforts, this FTA has the potential to deliver an additional $3-4 billion in business for the Indian textile and apparel sector, and expand further to a higher double-digit market share in the coming years,” he added.