India is likely to announce a Free Trade Agreement with the European Union next week as top officials visit India for a joint summit. European Commission President Ursula von der Leyen has repeatedly dubbed it the ‘mother of all trade deals’ — noting that the “final mile is always the hardest”. The two countries will also sign a ‘Security and Defence Strategic Partnership’ during the upcoming meeting, only the third such comprehensive agreement the EU has signed in Asia.
“We want an ambitious European trade policy. The agreement between the European Union and the Mercosur countries was an important breakthrough… further agreements are now to follow, first and foremost with India,” Reuters quoted German Chancellor Friedrich Merz as saying during a joint conference with Italy’s Giorgia Meloni.
The long-sought free trade agreement is likely to be announced during the India-EU Summit next week. According to a Reuters update quoting government sources, the two countries are expected to announce the conclusion of protracted negotiations on Tuesday. A formal update is expected on January 27 after Prime Minister Narendra Modi meets with top European officials.
‘Working to solve sticking points like CBAM’
“Both sides are working intensively to address the remaining challenges and bring the agreement over the line. We are committed to investing every effort to find workable, mutually beneficial solutions on issues such as CBAM, automobiles, and steel. The final mile is always the hardest, but it will be more than worth it,” she told Times of India during a recent interview.
Von der Leyen noted that the 27-nation bloc offered its trade allies “reliability, stability and genuine partnership built for the long term”. She also indicated that the FTA would eliminate some €4 billion in tariffs for exporters across segments and highlighted the jobs it would generate “for millions of workers” in both India and Europe.
“We do not seek dependency, but mutual resilience; not alignment by pressure, but cooperation by choice…We are coming all the way to India to strengthen our unique and trusted relationship in a time of systemic rivalry and growing global fragmentation. Our cooperation holds immense potential,” she added.
What are the hurdles?
An EU official told Reuters that the bloc aimed to “conclude negotiations on the free trade agreement” during the summit — before both sides move through internal procedures towards signing. Bilateral trade between India and the EU totalled $136.5 billion in the fiscal year to March 2025, making the 27-nation grouping one of New Delhi’s biggest trading partners.
“Negotiators are still trying to bridge differences on several sensitive issues, including India’s reluctance to sharply cut tariffs on auto imports,” an EU government source told the news agency.
A key concern for New Delhi is a range of non-tariff barriers — such as the EU’s newly introduced carbon levies on imports of goods including steel, aluminium and cement. The bloc has also withdrawn some tariff reductions granted to India as Brussels unwinds special tariff treatment for select countries under its Generalised System of Preferences.
An EU official also told ANI that the two sides did not see eye-to-eye on everything — particularly when it came to the Russian war in Ukraine. The EU continues to urge Russia to accept an unconditional ceasefire and encourages India to use its leverage for peace efforts. The official noted that while perspectives are shaped by different historical contexts, there is a genuine political will to recognize and minimize these divergences.