India-EU FTA likely to be finalised tomorrow

Over 90% of goods will see import duties reduced or eliminated

New Delhi: India and the European Union are likely to announce the conclusion and finalisation of negotiations of a free trade agreement on January 27.

The conclusion of the FTA talks will be announced in the India-EU (European Union) Summit, news agency PTI reported citing government official.

The pact has taken 18 years to reach the finish line. Talks began in 2007 and have seen two prime ministers, multiple trade commissioners, and several abandoned rounds.

Commerce and Industry Minister Piyush Goyal has called it the “mother of all deals”. European Commission President Ursula von der Leyen also reiterated the sentiments at Davos Summit recently.

”We value our shared commitment to a mutually beneficial, ambitious India-EU FTA for the prosperity of our businesses and people,” Goyal said in a social media post.

The timing of the India-EU trade pact isn’t accidental as global trade is in churn after US tariffs nudged supply chains to redraw themselves, and Delhi and Brussels have chosen to lock in predictability.

European Commission President Leyen along with European Council President Antonio Costa, are in New Delhi for a four-day visit to attend the Republic Day celebrations on January 26. They will meet with Prime Minister Narendra Modi on January 27 for the summit.

The deal won’t be signed immediately. Legal vetting of the text will follow, and ratification will take its own path. For the EU, that includes its parliament. For India, the Union cabinet. Hence, the implementation of the deal may take some time.

As with most FTAs, the arithmetic lies in duties. Over 90% of traded goods will see import duties reduced or eliminated. Labour-intensive sectors like textiles and footwear get the fastest relief—zero tariffs from day one. Other products will step down duties over five, seven or ten years, as per PTI.

Quota-based access, as seen in India’s pacts with Australia and the UK, will apply for autos and alcoholic beverages. Sensitive agri products will stay out.

Services see liberalisation as well—telecom, accounting, transportation, auditing—areas where India already outsources to Europe, and Europe outsources to India.

This will be India’s eighth trade pact since 2014, after Australia, the UK, Oman, New Zealand, the UAE, the EFTA bloc, and Mauritius. Older pacts—Asean, Japan, South Korea, Malaysia, SAFTA, and Singapore—set the precedent. But the EU deal is the biggest yet: 27 developed economies including France, Germany, Italy, Spain, and the Nordics.

The US has imposed tariffs as steep as 50%, rerouting trade and making diversification rational rather than ideological. India wants to cushion its exporters, reduce reliance on China, and access the EU market that takes 17% of India’s shipments. The EU sends 9% of its exports to India.