BRUSSELS
Indian and European Union officials are expressing strong confidence that a comprehensive trade deal between the two economic powers is well on track to be finalized by the close of the year. The 14th round of crucial negotiations concluded recently in Brussels, marking significant progress.
An unnamed EU official stated, “I can’t envision a scenario where we haven’t either neared completion or fully concluded the Free Trade Agreement by year-end,” highlighting the positive outlook.
Rajesh Agrawal, who has recently transitioned to the role of Commerce Secretary after leading negotiations with the U.S., was actively involved in the Brussels talks. It is understood that Darpan Jain from the Ministry will now spearhead India’s negotiations with the U.S., though Mr. Agrawal will maintain a direct role in those discussions.
L. Satya Srinivas leads the Indian negotiating team for the EU, and while formal talks in Brussels have concluded for this round, discussions are expected to continue remotely. Another round of face-to-face talks is scheduled for New Delhi in November.
In 2024, bilateral trade in goods reached a substantial €120 billion ($139 billion). However, both sides acknowledge persistent difficulties, primarily related to tariff and non-tariff barriers. Key contentious areas have included services, agriculture, dairy, pharmaceuticals, automobiles, and alcoholic beverages. To facilitate progress, negotiators have strategically deferred discussions on the most sensitive sectors.
The push to finalize an agreement by the end of 2025 stems from a clear political directive issued by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen earlier this year. Nevertheless, some challenging topics, particularly those concerning “trade and sustainable development,” continue to be debated.
India has consistently voiced objections to the EU’s Carbon Border Adjustment Mechanism (CBAM), a tax designed to levy a charge on emissions generated during the production of goods, including imports. This mechanism is set to be fully implemented on January 1, following a two-year transitional phase.
Commerce and Industry Minister Piyush Goyal has explicitly warned of potential retaliation from India should its exports be subjected to CBAM. In a recent speech, Mr. Goyal suggested that the CBAM could risk isolating Europe and lead to increased inflation within the bloc. The Indian government also opposes the integration of climate action with trade policy.
Sources close to the negotiations confirmed that discussions surrounding CBAM and other sustainability aspects were still ongoing as the Brussels round wrapped up.
EU Chief Negotiator Christophe Kiener acknowledged that the EU might need to adapt its approach on trade and sustainable development to find “something India can live with,” though he emphasized that a dedicated chapter on this topic remains essential. Mr. Kiener also noted that despite a lack of significant breakthroughs in previous rounds, both parties have achieved a deeper mutual understanding, recognizing that such negotiations inevitably become more complex towards their conclusion.
From the EU’s perspective, India’s Quality Control Orders (QCOs) represent one of the recurring challenges.
India’s Ambassador in Brussels, Saurabh Kumar, expressed optimism regarding the future of the trade talks. “No single issue or aspect holds disproportionate weight. Trade negotiations are inherently complex, and while difficulties exist, both sides are fully committed and determined to finalize this FTA,” Mr. Kumar stated, reiterating the strong political mandate to conclude discussions by December. Minister Goyal is also expected to visit Brussels later this month.
IMEC ‘Sherpa’ Meeting Held
Beyond trade, Brussels has also been a hub for other significant diplomatic activities. The Global Gateway Forum, focusing on the bloc’s investment strategy in various regions, was held this week, alongside a ‘Sherpa’ meeting for the India Middle East Europe Economic Corridor (IMEC). Deputy NSA Pavan Kapoor represented India virtually at this gathering.
With a recent ceasefire in the Middle East offering hope for reduced conflict, Brussels is eager to advance the IMEC project, which was first announced at the G20 Summit in New Delhi in September 2023. This ambitious corridor aims to establish vital transport, fiber optic, and energy routes connecting India to Europe through West Asia.
An EU official underscored the strong enthusiasm for the project, stating, “We are very keen on it, and the Indians are very keen on it, as are others. We are also making various investments to support different segments of the corridor. The crucial factor, however, is the stabilization of the Middle East.” The official also highlighted the continued importance of support from the U.S.
“We also need the momentum from the Americans,” they added.
When asked about any specific limitations hindering the operationalization of the IMEC project, Ambassador Kumar clarified that participating nations are actively defining their respective responsibilities. “There are no limiting factors. The involved countries are currently organizing themselves to determine the path forward and allocate responsibilities,” he explained.