Goyal Encourages EU Counterpart to Maintain Momentum
India and EU Accelerate Trade Deal Negotiations
India and the European Union (EU) are actively advancing discussions for an interim trade agreement, with the goal of finalizing it by July. Meetings have been conducted between Indian Commerce Minister Piyush Goyal and EU Commissioner Marcos Sefcovic, focusing on tariffs, non-tariff barriers, and intellectual property rights. The intention is to establish a comprehensive Free Trade Agreement (FTA) by the end of the year, aiming to enhance bilateral trade in light of global uncertainties. Both parties are committed to maintaining a swift pace in FTA negotiations. (Image Source: PTI)
On Friday, Goyal met with Sefcovic in Brussels for the second time within a month, as both sides intensified efforts to reach an interim trade deal by July. This meeting followed the completion of the latest round of discussions regarding the trade agreement. The Indian delegation is led by L Satya Srinivas, an additional secretary from the Department of Commerce.
Prior to heading to Brussels, Goyal was in Washington from May 23, where he held back-to-back discussions with US Commerce Secretary Howard Lutnick and participated in four days of talks aimed at refining the interim trade agreement before the deadline to impose reciprocal tariffs on July 8. Following the meeting, Sefcovic expressed optimism on social media, stating, “We continue to make progress. Let us maintain the momentum — with hard work and clear focus — and I look forward to our next meeting soon.” In response, Goyal reaffirmed his commitment, saying, “Let us keep this pace going. We remain committed to the shared prosperity of India and the EU.”
Before this Brussels meeting, India and the EU had conducted the 11th round of FTA discussions from May 12 to May 16. An official mentioned, “We are looking for an early harvest. We aim to achieve it as soon as possible, targeting July for the early harvest.” The interim trade agreement will not only address tariffs on goods but will also tackle non-tariff barriers, government procurement, intellectual property rights, trade remedies, rules of origin, and sanitary and phytosanitary measures. These have been identified as vital aspects of the FTA by both sides, which overall consists of 23 chapters covering a range of topics such as trade and sustainable development, transparency, good regulatory practices, subsidies, and anti-fraud measures.
The initial agreement with the EU is expected to evolve into a comprehensive FTA after further negotiations. In late February, European Commission President Ursula von der Leyen, along with a complete panel of commissioners, visited India to discuss various facets of the relationship with Prime Minister Narendra Modi, setting a year-end deadline to finalize the FTA.
Due to the looming deadline and the complexities of reaching agreements on non-core issues, both parties consented to approach the FTA in phases. An additional factor pushing the negotiations forward has been the changing dynamics of global trade, particularly following US President Donald Trump’s significant tariff changes, which have created global trade uncertainties. Countries are accelerating their trade agreements to safeguard against disruptions caused by a global trade war. The recent conclusion of India-UK trade talks also provides impetus to these negotiations, as the key issues are similar. Notably, in previous FTA discussions, the UK participated as part of the 27-member group of the EU; however, it officially left the EU in 2020 after Brexit. Fresh FTA discussions between India and the UK were held in 2022.
India’s key priorities in its negotiations with the EU include zero tariffs on labor-intensive exports and increased access to the EU’s services market comprised of 27 member states. Meanwhile, the EU has urged India to reduce tariffs on cheese and skimmed milk powder, which are currently in place to protect its domestic dairy sector. Indian officials have indicated that they are unwilling to offer concessions in dairy matters across any FTAs. Additionally, European wine producers are advocating for improved access to the Indian market, where imported wines are subject to a 150% tariff. Automotive manufacturers are also seeking a reduction in import duties on completely built-up (CBU) vehicles from the current 70% to a range of 10-20%.
Similar issues were encountered by India and the UK in their FTA negotiations, where India agreed to reduce duties on whiskey and gin from 150% to 75%, while automotive tariffs would be cut from over 100% to 10% under specified quotas. Under this agreement, India has secured duty-free status for 99% of its exports to the UK. The EU stands as one of India’s major trading partners, second only to the US. From April to February of the previous fiscal year, India’s exports to the EU reached $69 billion, while imports were recorded at $54.6 billion.
