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Decision to finalise India-EU FTA by year end comes amid looming US tariff hikes. (Image credit: PIB)

India, EU set year-end deadline for free trade deal amid US tariff concerns

| @indiablooms | Feb 28, 2025, at 10:02 pm

New Delhi: India and the European Union (EU) have agreed to finalise a long-pending free trade agreement by the end of this year, marking the first time both sides have committed to a deadline for the negotiations, media reports said.

The decision comes as they seek to mitigate the impact of potential US tariff hikes.

The announcement was made at a joint press conference on Friday by European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi during her two-day visit to India, reported The Economic Times.

Talks for the trade pact, which would require India to make significant concessions in its highly protected market, resumed in 2021 after an eight-year hiatus.

"We have prepared a blueprint for collaboration in the areas of trade, technology, investment, innovation, green growth, security, skilling and mobility," Modi said, instructing officials to conclude the deal by year-end, according to the report.

The EU remains India’s largest trading partner in goods, with bilateral trade increasing by nearly 90% over the past decade to reach $137.5 billion in the 2023-24 fiscal year.

Von der Leyen emphasised the need for an "ambitious" trade and investment agreement covering industries such as batteries, pharmaceuticals, semiconductors, clean hydrogen, and defence, the report said.

Her visit, accompanied by EU leaders, comes at a time of rising global trade tensions, with former US President Donald Trump threatening reciprocal tariffs on all nations, including the EU and India, by April.

"We both stand to lose from a world of spheres of influence and isolationism, and we both stand to gain from a world of cooperation and working together," von der Leyen stated before her discussions with Modi, according to the report.

She added that the evolving geopolitical landscape offers both Europe and India an opportunity to "reimagine their partnership."

Deal faces hurdles

Progress on the agreement has been slow as India has been resisting tariff cuts in key sectors, while the EU has been reluctant to ease visa restrictions for Indian professionals.

Brussels is pushing for India to lower tariffs exceeding 100% on imported cars, whiskey, and wine, while New Delhi seeks greater access for its pharmaceutical and chemical exports to the EU market.

India is also pushing for reduced tariffs on its textiles, garments, and leather products and opposes an EU proposal to impose 20%-35% tariffs on high-carbon goods, including steel, aluminium, and cement, starting January 2026. 

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