India and the European Union are in the final and most challenging phase of negotiations for a comprehensive free trade agreement (FTA), with officials describing the talks as having reached a “historic juncture.” Commerce Secretary Rajesh Agrawal confirmed that 20 out of 24 chapters of the agreement have been fully closed, while negotiations on the remaining issues are continuing on a day-to-day basis.
The urgency has increased as European Commission President Ursula von der Leyen and European Council President Antonio Costa are set to attend India’s Republic Day celebrations on January 26, followed by the India–EU Summit on January 27. Both sides are working to finalise the draft agreement in time for a possible announcement during the summit, subject to the successful resolution of outstanding matters.
The proposed FTA is wide-ranging and covers multiple sectors, though both sides have agreed to exclude sensitive agricultural items. Key unresolved issues include the European Union’s Carbon Border Adjustment Mechanism (CBAM), as well as concerns related to steel and automobiles. Officials indicated that several options are being explored to reach a mutually acceptable solution.
Beyond trade, India and the EU are also expected to advance cooperation in security and defence, including maritime security in the Indo-Pacific, cyber and hybrid threat mitigation, and protection of undersea critical infrastructure. An India–EU Business Forum will be held alongside the summit to strengthen economic engagement.
Trade relations between the two sides have expanded significantly in recent years. The EU is India’s largest trading partner in goods, while India is among the EU’s top trading partners globally. Negotiations on a bilateral investment agreement and a geographical indications pact are ongoing but are unlikely to be concluded at this stage.
With global trade dynamics shifting and supply chain diversification gaining importance, both India and the EU see the FTA as a strategic step to deepen economic ties and strengthen their long-term partnership.