Sign in Subscribe
European Union

India and EU Agree to Continue FTA Discussions Despite Sensitivities

Strategic Insights

— 1 min read

India and the European Union (EU) are set to continue negotiations on their proposed free trade agreement (FTA) despite sensitivities around auto and steel trade, as well as the EU's regulations like carbon tax that aim to link trade to environmental protection goals. The two sides have agreed to work closely to finalize non-sensitive industrial tariff lines in the FTA, with 10 of the 20 chapters or policy areas of the proposed agreement already finalized. While discussions on sensitive issues will continue, both parties aim to make significant progress towards closure by the end of December.

Key Takeaways:

  • The Commerce and Industry Ministry stated that 10 of the 20 chapters or policy areas of the proposed FTA have been finalized, and 4-5 chapters have been broadly decided.
  • India and EU are working towards a December-end deadline to close their negotiations on the FTA.
  • The EU's Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulation (DR) are key issues in the negotiations, as India seeks preferential treatment for its key proposals, particularly those related to labor-intensive sectors.
  • India is interested in protecting its steel and aluminium sectors, which are affected by the EU's safeguard duties, imposed since 2018, and carbon tax, set to begin in January 2026.
  • The EU is seeking freer access to the Indian market in the auto sector, which New Delhi wants to protect due to its role in domestic manufacturing.
  • Minister Piyush Goyal emphasized the need for preferential treatment for India's key proposals and discussed India's concerns on Non Tariff Measures and new EU regulations with European Commissioner for Trade Maros Sefcovic.

Statistics:

  • 10 of the 20 chapters or policy areas of the proposed FTA have been finalized.
  • 4-5 chapters have been broadly decided in principle for the proposed FTA.
  • 7 products will be covered by the EU's carbon tax, with a threshold for excess carbon emissions.
  • Carbon tax will be implemented by the EU from January 1, 2026.
  • The EU has imposed safeguard duties on imported steel since 2018, setting country-wise quotas on imports.

Sources:

  • Commerce and Industry Ministry
  • Piyush Goyal, Commerce and Industry Minister
  • Maros Sefcovic, European Commissioner for Trade
  • EU Online Media Services Pvt. Ltd., (distributed by Contify.com)

Read more