Context:
The US has imposed reciprocal tariffs of 26% on India and 20% on the European Union (EU), triggering retaliatory measures and a shift in trade alignments:
- China has imposed a 34% retaliatory tariff on US goods
- EU is preparing countermeasures against the US decision
This has created geopolitical trade instability, pushing key economies to accelerate bilateral partnerships and diversify market access.
India-EU Trade Strategy
Amid rising uncertainty, India and the EU are intensifying bilateral Free Trade Agreement (FTA) discussions:
- Commerce Minister Piyush Goyal and EU Trade Commissioner Maroš Šefčovič are expected to hold high-level talks in the coming days
- The 11th round of FTA negotiations is scheduled for the week of May 5 in Delhi
- The 10th round concluded in Brussels in March
Both sides aim to finalize the FTA by the end of 2025, aligning with the broader strategy of reducing dependence on unpredictable multilateral trade environments.
India-EU Economic Relationship
- EU is India’s second-largest trading partner in goods
- In FY24, exports to the EU reached $75.9 billion, accounting for 17.4% of India’s total exports
- Imports from the EU stood at $61.5 billion, contributing 9% of total imports
The current trade imbalance is favorable to India, strengthening its hand in negotiations.
Challenges
- The India-EU Broad-based Trade and Investment Agreement (BTIA) has been under negotiation since 2007
- Talks stalled in 2013 after 15 inconclusive rounds
- Key sticking points include tariff reductions, regulatory standards, and investment protections
- Though relaunched in 2022, fundamental differences persist, requiring political-level clearance
An assessment post the September 2023 round still awaits resolution, indicating sensitive unresolved issues likely tied to data localization, agriculture, and intellectual property rights.
Overlap with US Trade Talks
India is also in FTA talks with the US, targeting fall 2025 for the first phase of an agreement. Thus, simultaneous negotiations with both the EU and US could:
- Allow India to leverage concessions across talks
- Increase its geoeconomic relevance in a fragmented global trade environment
High-Stakes Diplomatic Play
India’s position as a resilient, fast-growing economy is attracting renewed attention from trade partners amid global volatility. However, the success of the India-EU FTA will depend on:
- Political will to overcome past deadlocks
- India’s ability to balance regulatory autonomy with market openness
- Strategic clarity on overlapping bilateral commitments
