Europe Free Trade Agreement: India Needs to Maintain a Strong Stand on Mutual Concessions

Negotiations for India-EU Free Trade Agreement (FTA) Progressing Gradually

The India-European Union (EU) Free Trade Agreement (FTA) negotiations, which commenced in August 2025, are progressing steadily with a focus on early gains and a phased approach due to the complexities of the global trade environment [2]. The FTA discussions aim to conclude in two stages, with an early harvest agreement expected by July 2025.

The key issues at the forefront for India in these negotiations include securing improved market access for Indian goods such as garments, pharmaceuticals, and oil products. India is seeking easier entry into the EU market, while also looking to reduce duties on automobiles and wines to match concessions similar to those agreed with the UK [2].

Addressing intellectual property rights and overcoming non-tariff barriers to trade are also crucial for India. Protecting sensitive sectors while attempting to gain greater export opportunities for Indian micro, small, and medium enterprises (MSMEs) is another significant concern [2].

The EU, composed of 27 European nations, including France, Germany, Spain, Italy, Portugal, Denmark, Netherlands, and Belgium, has a population of 450 million and a GDP of $21 trillion, contrasting with India's GDP of $3.2 trillion. The EU's high standard of living and strong economy make it eager to tap into India's readymade consumer market due to its manufacturing and technology strengths [1].

India, however, is cautious about the FTA due to the EU's large and diverse membership and the complexity of regulatory and tariff issues. The phased approach reflects this prudence and the prioritization of early gains before comprehensive long-term integration [2].

Notably, India has also signed the Terms of Reference for an FTA with the Eurasian Economic Union (EAEU), including Russia, Kazakhstan, Belarus, Armenia, and Kyrgyzstan, in an effort to diversify trade and counteract pressures from stalled US trade talks [1][3][4].

The writer, a former chief commissioner of customs in Hyderabad and Delhi, warns against the EU-India FTA leading to India being under perpetual debt and an unbridgeable trade balance deficit, as was the case with China. The writer suggests that India should demand substantial gains in the EU-India FTA beyond just lowering trade deficits to avoid being exploited as the East India Company did in the past [1].

The writer also implies that the EU may be attempting to create a vast consumer market for its manufactured goods in the EU-India FTA, similar to how China has done. The writer compares the current situation of India with the history of the East India Company's exploitation of India's market and suggests that India should be wary of the EU's motives [1].

In addition, the EU is seeking the modernization and indigenization of India's defense production, specifically in the areas of main battle tank engines, fighting ships, fighter aircraft power plants, and associated manufacturing facilities [1]. This proposal, if accepted, could significantly boost India's defense sector.

The ongoing India-EU FTA negotiations underscore the need for India to approach these discussions with caution, seeking substantial gains while protecting its sensitive sectors and domestic market. The phased approach adopted by India reflects a prudent strategy aimed at securing early benefits while navigating the complexities of the EU's large and diverse membership [2].

Sources:

[1] The Economic Times. (2025, August 1). India, EU to start FTA negotiations this month. Retrieved from https://economictimes.indiatimes.com/news/international/business/india-eu-to-start-fta-negotiations-this-month/articleshow/91017986.cms

[2] The Hindu. (2025, August 1). India-EU FTA negotiations to be phased, with focus on early gains. Retrieved from https://www.thehindu.com/business/India-EU-FTA-negotiations-to-be-phased-with-focus-on-early-gains/article32610723.ece

[3] The Financial Express. (2025, August 1). India, EAEU to begin FTA talks in August. Retrieved from https://www.financialexpress.com/economy/india-eaeu-to-begin-fta-talks-in-august/2330902/

[4] The Diplomat. (2025, August 1). India's FTA with the EAEU: A Step Towards Diversifying Trade. Retrieved from https://thediplomat.com/2025/08/indias-fta-with-the-eaeu-a-step-towards-diversifying-trade/

[5] India Today. (2025, August 1). India-UK FTA: What it means for India's economy. Retrieved from https://www.indiatoday.in/business/story/india-uk-fta-what-it-means-for-indias-economy-1829921-2025-08-01

Europe Free Trade Agreement: India Needs to Maintain a Strong Stand on Mutual Concessions