India-EU FTA talks likely to conclude next week, says report. From lower tariffs to sector relief — Here's what we know

Negotiations between India and the European Union (EU) on their free trade agreement (FTA) are likely to end on 27 January (Tuesday), according to a Reuters report citing two sources each from the Indian and EU governments.

This FTA will pave the way for reduced tariffs on European cars and wine and expanded market for the Indian electronics, textiles and chemicals sectors, it added.

Notably, Prime Minister Narendra Modi is set to meet European Council President Antonio Costa and European Commission President Ursula von der Leyen from 25-28 January. Further, von der Leyen is also scheduled to co-chair an India-EU summit during the visit, the Indian government sources said.

The commerce ministry did not respond to queries, the report added.

India-EU trade deal: Which sectors likely to benefit?

• As per the report, the European Union imports close to $125 billion of textiles annually, where India holds a 5–6% share versus China's 30%. It is here that the FTA will likely result in gains for India, especially amid high US tariffs.
• Further, India's autos, chemicals, electronics, pharmaceuticals and textiles sectors are likely to emerge as key beneficiaries of a potential India–EU free trade agreement, the report cited Jefferies saying.
• Notably, the report cited an Indian trade ministry official saying that some sensitive agricultural items have been excluded from negotiations.

India and EU to announce FTA this year? What we know

• The report cited an official saying that once finalised and ratified by the European Parliament — this process takes at least a year; the India-EU trade pact would boost Indian exports such as textiles and jewellery.
• Bilateral trade between India and the EU totaled $136.5 billion in 2024/25 fiscal year ending March, making the 27-nation bloc one of India'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 Reuters.
• At the World Economic Forum 2026 in Davos on 20 January, von der Leyen signalled progress, stating the EU is close to concluding the agreement but acknowledged that additional work remains, the report added.

Background: Why is the deal significant?

• This agreement comes days after the EU signed a pivotal pact with the South American bloc Mercosur, following deals last year with Indonesia, Mexico and Switzerland.
• Meanwhile, India has also signed trade deals with Oman, New Zealand and the UK, in an ever-evolving geopolitical space amid Donald Trump's forceful bid for Greenland that has tested America's relations with Europe and NATO allies.
• Negotiations were relaunched in 2022 after a nine-year pause, gaining traction last year amid rising trade tensions when United States President Donald Trump imposed 50% tariffs on India — among the highest in the world.

Are there any challenges to India-EU's trade deal?

The report noted that India's key concerns outside of tariffs is the EU's newly introduced carbon levies on imports of goods including steel, aluminium, cement, with industry experts saying there was little scope for relaxation.

“Duty-free access to the EU could help offset losses for Indian textile and jewellery exporters in the US. An India–EU FTA would cut tariffs on textiles, garments and leather, letting Indian exporters compete more evenly with Bangladesh and Vietnam,” Ajay Srivastava, founder of the Delhi-based think tank Global Trade Research Initiative, told Reuters, while noting regulatory hurdles remain.

(With inputs from Reuters)