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Informist, Friday, Jan. 23, 2026

 

--Govt source: India-EU FTA may mirror UK deal, but with a larger scope

--Govt source: Sensitive agri-related issues outside scope of India-EU FTA

--Govt source: To ensure protection of national interests under FTA with EU

--CONTEXT: India, EU likely to announce FTA talks conclusion early next week

 

By Krity Ambey

 

NEW DELHI – The free trade agreement between India and the European Union, which is likely to be announced early next week, will mirror the India–UK trade deal but on a much larger scale, a senior government official said. European Commission President Ursula von der Leyen and European Council President Antonio Costa, who will arrive in New Delhi this weekend for the Republic Day celebrations, are expected to announce the trade deal alongside Prime Minister Narendra Modi.

 

If structured along similar lines as the UK agreement, the deal may grant duty-free market access to the entire quantum of Indian exports to the EU, with Brussels cutting duty on over 90% tariff lines. In return, India may slash duty on at least 90% of tariff lines for European goods, as it did under the India–UK trade pact.

 

When announced, this will be India's fourth trade deal this financial year, after the ones with the UK, Oman, and New Zealand. The EU accounts for more than 15% of India's total exports. India shipped goods worth $78.85 billion to the bloc in 2024–25 (Apr–Mar) and posted a trade surplus of $15.17 billion. The EU may overtake the US as India's top export destination in the near term, as Washington has imposed a 50% tariff on Indian goods. India's exports to the EU were $49 billion in Apr-Nov, compared to $59 billion to the US. The bloc is a key focus under the commerce ministry's export diversification strategy.

 

A major feature of the India-UK trade deal was New Delhi's commitment to lower duty on automobiles in a phased manner under a specified quota. A similar provision may find place in the trade deal with the EU as well. 

 

Under the UK deal, India agreed to cut duties on cars with engine capacity above 3,000 cc for petrol vehicles and 2,500 cc for diesel vehicles to 10% from 110% over 15 years. It also provided import quotas ranging from 25,000 units in the first year to 15,000 units in the 15th year. Five years after the deal is implemented, India will also extend duty concessions to high-end electric vehicles from the UK with a cost, insurance, and freight value exceeding 80,000 pound sterling (about $107,000 or around INR 9.8 million).

 

Duty concessions on whisky and gin and opening up of the government procurement segment to UK businesses – which were the other salient features of the UK deal – may also find a place in the free trade agreement with the EU.  

 

On the export front, Indian shipments to the EU from sectors such as electronics, petroleum products, gems and jewellery, textiles, and machinery are expected to benefit significantly from the agreement. However, as the India–EU pact is being described as the "mother of all deals", the gains may extend well beyond merchandise trade. India's services sector is also likely to receive a strong boost from the agreement, with high-value services and intellectual property-intensive segments such as information technology, engineering, business services, and telecom emerging as key beneficiaries.

 

Both sides have agreed to keep sensitive agriculture-related issues outside the scope of the trade deal, another senior government official said. This official averred India's national interests would be protected under the pact, which might also include provisions to address New Delhi's concerns over the EU's Carbon Border Adjustment Mechanism. However, the official did not specify the form or extent of any relief India might seek under Brussels' carbon tax regime.

 

The European Commission implemented its Carbon Border Adjustment Mechanism on Jan. 1, which entails a duty based on the reported carbon content in the shipments entering the EU. The carbon tax currently applies to iron and steel, aluminium, cement, fertilisers, hydrogen, and electricity entering the EU, but Brussels plans to extend it to most products by 2034.

 

Resolving differences over the Carbon Border Adjustment Mechanism is expected to be the final and most challenging leg of the negotiations. The two sides had not reached a consensus on the issue until at least last week, but officials from India and the EU have engaged online this week to address the sticky point. India and the EU have been negotiating the trade agreement for the past three years.

 

The landmark deal comes at a time when both India and the EU are at odds with the US. Indian goods currently face steep tariff in the US, while Brussels has suspended its trade engagement with Washington following US President Donald Trump's remarks on acquiring Greenland and his fresh tariff threats against some member nations of the EU, which have subsequently been withdrawn.  End

 

US$1 = INR 91.79

 

Edited by Avishek Dutta

 

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