India-EU Free Trade Agreement Expected to Secure Early Harvest Deal by July
India and EU Set Target for Early Harvest FTA by July 2025
India and the European Union (EU) are working towards finalizing an early harvest agreement as part of their Free Trade Agreement (FTA) by July 2025. The focus is on crucial trade topics, including tariffs, intellectual property rights (IPR), and market access. Negotiations are advancing swiftly to mitigate global trade uncertainties and strengthen their economic partnership.
The early harvest deal with the EU is intended to evolve into a comprehensive FTA after additional negotiations.
Intensified Negotiations Underway
According to a senior official speaking on Wednesday, both parties are keen to close the initial phase of the bilateral FTA by July. “We aim to achieve an early harvest as soon as possible, targeting finalization by July,” the official mentioned.
In line with this, an Indian delegation led by chief negotiator Satya Srinivas has departed for Brussels to resume discussions that were paused on Friday. Just last week, the two sides engaged in the 11th round of negotiations in New Delhi, and the swift movement to Brussels highlights the urgency driving these talks.
Core Issues in Focus
The early harvest agreement will address not only tariffs on goods but also tackle non-tariff barriers, government procurement policies, trade remedies, rules of origin, and sanitary and phytosanitary measures. These have been recognized as key elements of the FTA by both stakeholders. The comprehensive trade agreement will include 23 chapters covering various subjects such as trade and sustainable development, transparency, regulatory practices, subsidies, and anti-fraud measures.
Recent Developments and External Influences
Late February saw a visit from European Commission President Ursula von der Leyen and a full panel of commissioners to India for comprehensive discussions covering the entirety of their bilateral relationship. During a meeting with Prime Minister Narendra Modi, a year-end deadline for concluding the FTA was established. Given the pressing timeline and the challenges in reaching consensus on non-core topics, both sides have agreed to approach the FTA in phases.
Further urgency has been added in light of shifts in the global trade environment following U.S. President Donald Trump’s significant tariff changes, which have injected uncertainty into international markets. Countries are hastening their trade agreements to cushion the impacts of this global trade strife. The recent conclusion of trade negotiations between India and the UK has also provided momentum for discussions, as the key issues involved in both agreements are reminiscent of one another. Historically, the UK participated in India-EU negotiations as part of the 27-member bloc until Brexit officially occurred in 2020, prompting a fresh start on the FTA in 2022.
India’s Trade Interests and EU Demands
In the negotiation process, India’s key demands from the EU include zero tariffs on labor-intensive exports and increased access to the services market spanning the 27 member states. Conversely, the EU seeks to have India lower tariffs on products such as cheese and skimmed milk powder, which are currently protected by high duties to support the domestic dairy sector. Indian officials have indicated a firm stance against making any dairy concessions in the context of FTAs.
European winemakers are also advocating for expanded access to the Indian market, where imported wines currently face a staggering 150% tariff. Furthermore, European automotive manufacturers are calling for a reduction in import duties on completely built-up (CBU) vehicles from the current 70% to between 10% and 20%.
Insights from India-UK Trade Deal
Similar trade challenges have been addressed in the India-UK FTA. India consented to halve tariffs on whiskey and gin from 150% to 75%, with a further reduction to 40% by the tenth year of the agreement. Tariffs on automobiles are set to decrease from over 100% to 10% under a quota system, granting India duty-free access for 99% of its exports to the UK under this arrangement.
As of now, the EU stands as India’s second-largest trading partner following the United States. In the fiscal year from April to February, India’s exports to the EU amounted to $69 billion, while imports were recorded at $54.6 billion.
