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European Union

India and EU Agree to Continue Discussions on Key Issues in Proposed Free Trade Agreement

Strategic Insights

— 2 min read

India and the European Union have decided to continue discussions on issues such as steel, auto, and carbon tax, which have higher sensitivities under the proposed free trade agreement. The two sides also agreed to work together to finalize non-sensitive industrial tariff lines and address concerns on non-tariff measures and new EU regulations. India has emphasized the need for preferential treatment for its key asks, particularly those related to labor-intensive sectors.

Key Takeaways:

  • India and the EU have agreed to continue discussions on steel, auto, and carbon tax, which have higher sensitivities under the proposed free trade agreement.
  • The two sides have decided to work together to finalize non-sensitive industrial tariff lines.
  • India has emphasized the need for preferential treatment for its key asks, particularly those related to labor-intensive sectors.
  • The EU has announced regulations such as CBAM (carbon border adjustment mechanism) and EUDR (Deforestation Regulation) which have been strongly objected to by India.
  • Under CBAM, Indian exports of steel, aluminium, and cement to the EU could face tariffs of 20-35%.
  • India's exports of products like coffee, leather hides, and paperboard worth USD 1.3 billion annually to the European Union will get impacted due to the deforestation regulation adopted by the EU.
  • The two sides have reaffirmed their shared commitment to conclude the negotiations for the proposed FTA by the end of 2025.
  • The EU technical team will visit India next week to advance the ongoing discussions and achieve a constructive conclusion.
  • India's bilateral trade in goods with the EU was USD 136.53 billion in 2024-25 (exports worth USD 75.85 billion and imports worth USD 60.68 billion).

Statistics:

  • India's bilateral trade in goods with the EU was USD 136.53 billion in 2024-25 (exports worth USD 75.85 billion and imports worth USD 60.68 billion).
  • India's exports of products like coffee, leather hides, and paperboard worth USD 1.3 billion annually to the European Union will get impacted due to the deforestation regulation adopted by the EU.
  • Under CBAM, Indian exports of steel, aluminium, and cement to the EU could face tariffs of 20-35%.
  • India's bilateral trade with the EU accounts for about 17% of its total exports.

Sources:

  • Commerce ministry of India, "India and EU agree to continue discussions on key issues in proposed free trade agreement", October 29.
  • The Northlines, "EU-India FTA talks: Both sides to conclude non-sensitive chapters", October 29.
  • GTRI, "EU's Deforestation Regulation to Impact Indian Exports", (no date mentioned).
  • European Commission, "Maros Sefcovic", (no date mentioned).
  • European Commission, "Sabine Weyand", (no date mentioned).

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