European Commission PresidentUrsula Von der Leyen and Indian PM Narendra Modi emphasized the need to finalize negotiations that have faced several roadblocks and announced at the joint Press Conference, but the deadline has been set to finalize the deal by the end of this year (2025).Mr. Modi said, “We have now prepared a blueprint for collaboration in the areas of trade, technology, investment, innovation, green growth, security, skilling, and mobility.”

Talks for the agreement had started in 2007 and stalled for eight years in 2013 after several parleys since the general elections were taking place in 2014. They resumed in 2021 when the Modi Government agreed to start all over again. India has been reluctant to decrease import duties as has been continuously emphasized by Trump. EU on its part, has been hesitant to ease visa restrictions for Indian professionals. There have been other points of disagreement like duty reduction on wines and spirits but in 2022 a similar Treaty was signed according to which the duties on premium Australian wines were decreased in steps over the next 10 years.

The EU is India’s largest trading partner in goods, with bilateral trade increasing nearly 90% over the past decade to reach $137.5 billion in the Fiscal 2023-24. Von der Leyen called for an “ambitious” trade and investment agreement, highlighting sectors such as batteries, pharmaceuticals, semiconductors, clean hydrogen, and defense as key areas of cooperation.

Also Read : India EU FTA: First Round of Negotiations concludes in Delhi

The world economic order has been changing fast since Donald Trump took over the Oval Office on January 20 this year. He has been threatening to impose reciprocal tariffs on all nations, including the EU and India with some reciprocal tax increases already announced and in force. He even made Modi do the impossible-reducing duties on the popular motorcycles, Harley Davidson by 50%.

Both the EU and India and in fact most other countries with stable or growing economies need to come together and face the brunt of the current onslaught by the US better. “We both stand to lose from a world of spheres of influence and isolationism, and stand to gain from a world of cooperation and working together and there is an opportunity for Europe and India to reimagine their partnership,” says Von der Leyen”

Also Read : European Union maybe over optimistic about FTA with India

There have been several points of difference between the two. The EU has been pushing India to reduce tariffs exceeding 100% on imported cars, whiskey (the major constituent UK has since left EU and a separate Indo-UK FTA has been on a parallel track) and wine.India wants greater access for its pharmaceuticals and chemical exports and reduced tariffs on textiles, garments, and leather products. India also objects to the EU’s proposed carbon border tax, and has reportedly threatened to impose tariffs of 20% to 35% on high-carbon goods like steel, aluminum, and cement from January 2026.

Incidentally, Piyush Goyal is currently in the US to meet his counterparts to discuss various trade issues and tariffs so that India is least affected in the battle of nerves between Trump and Modi.

Also Read : India and EU getting Ready for FTA Talks in May

It may be added that each constituent nation of the EU has to ratify the treaty individually and the process may take another 1-2 years before it becomes a reality and the Indian wine lovers can see a dent in the heavy duties. Moreover, excise duty is a state subject and many States might insist on increasing excise duties but seemingly would refrain as a majority of States are controlled by the same party BJP and the threat seems to be minimal at this stage.

Subhash Arora