India-EU Trade Pact: Key Progress and Challenges in Steel and Auto Sectors Explored

New Delhi: Talks on the free trade agreement between India and the European Union (EU) are moving forward, but some differences remain. Key issues include the carbon tax, steel, and automobiles. A senior official provided these insights on Monday.

Last week, senior officials from India and the EU wrapped up their 14th round of discussions in Brussels, which began on October 6. The aim is to resolve various concerns related to goods and services quickly.

“Progress is good,” the official said. “We still need to tackle concerns around CBAM, steel, and automobiles. Fortunately, there are no substantial issues in agriculture.” Commerce Secretary Rajesh Agrawal participated later in the talks to help push negotiations forward, meeting European Commission Trade Director General Sabine Weyand during his visit.

Additionally, Commerce and Industry Minister Piyush Goyal is expected to travel to New Zealand for further trade discussions. The third round of talks for the India-New Zealand Free Trade Agreement (FTA) was completed on September 19.

Negotiations for the India-EU FTA resumed in June 2022 after an eight-year break. The discussions were halted in 2013 due to disagreements on market accessibility.

The EU is seeking major duty reductions on automobiles, medical devices, and other products like wine and meat. They also want to strengthen intellectual property protections.

If the trade agreement goes through, Indian exports—like textiles, pharmaceuticals, and electronics—could see a boost in competitiveness within the EU market.

The negotiations cover a wide range of topics, including trade in goods, services, investment, and sustainable development. A significant point of contention has been the EU’s Carbon Border Adjustment Mechanism (CBAM), which could impose tariffs of 20-35% on Indian steel, aluminum, and cement starting next year. India has opposed this strongly.

In 2024-25, India’s trade in goods with the EU reached USD 136.53 billion, with exports totaling USD 75.85 billion and imports at USD 60.68 billion. This makes the EU India’s largest trading partner. Notably, the EU market represents about 17% of India’s total exports, while India accounts for 9% of the EU’s overseas shipments. Moreover, in 2023, bilateral trade in services was estimated at USD 51.45 billion.

As globalization and trade policy evolve, understanding trade dynamics is crucial. With rising global interest in markets like India, this agreement could open new doors for both regions. Stay tuned as these negotiations continue to develop.

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