EU and India Agree to Finalize Free-Trade Pact
India and the European Union are doing their best to finalize a free trade agreement by the end of 2025. According to Ursula von der Leyen, this could be the largest deal of this kind on a global level.
This deal finalization would mark the end of negotiations that took place over the course of several years. After the approval of the agreement, it will be easier than ever for businesses to exchange services and goods. The commitment is being pushed forward amid rising geopolitical tensions with China and the United States.
The Trading Relationship Between India and the EU
Currently, India’s largest trading partner is the European Union. In 2023, 12.2% of the entire Indian trade amounted to goods traded with the EU, consisting of €124 billion in total. Services trades also reached €60 billion in that same year.
India is the EU’s 9th largest trading partner. Meanwhile, China and the U.S. only account for 10.5% and 10.8% of the entire Indian trade.
In the last few years, trade between the EU and India has increased. However, differences between countries, specifically on matters like pharmaceuticals, automobiles, and agriculture, have delayed a free trade pact. Nevertheless, it appears that the two parties took an essential step forward in terms of negotiations.
The EU and India Agreed to Get the Deal Done in 2025
Talks regarding the free-trade pact crumbled back in 2013. Then, they were resumed in 2021. In 2025, the pact will be finalized, and Ursula von der Leyen spoke about the true potential of this agreement.
“A free trade agreement between the EU and India would be the largest deal of this kind anywhere in the world. I am well aware it will not be easy. But I also know that timing and determination counts, and that this partnership comes at the right moment for both of us,” she said. The European Commission President met with Indian Prime Minister Modi to discuss the deal and push to get it done by the end of 2025.
According to von der Leyen, sectors such as artificial intelligence and clean technology would be the main ones benefiting from the pact. Still, many compromises will be necessary on both sides when it comes to medication, alcohol, textiles, and cars. While India wants lower tariffs on textile and pharmaceutical exports, the EU is looking for lower tariffs on whiskey, wine, and cars.
More Trade Agreement Talks
Before the European Commission visited India, Douglas Alexander, the Minister of State for Trade Policy of the UK met Piyush Goyal, the Commerce and Industry Minister of India. The meeting took place on February 24, 2025. The next day, discussions on a free trade agreement between the countries’ officials resumed.
There were also discussions regarding the India-U.S. bilateral trade. The Commerce Minister ended a U.S. tour between March 4 and March 6. One of the main topics of discussion was Mission 500. On top of that, there will be more talks about establishing safeguard duties on steel.
