India-EU FTA: Negotiators stay back in Brussels to bridge trade issues

The government has instructed its negotiating team to resolve the matter before returning to New Delhi, emphasizing the need to finalize the deal before the end of the year, the people mentioned above told Mint, speaking on the condition of anonymity. The team is led by special secretary L. Satya Srinivas.

At the heart of the dispute lies Europe’s demand for tighter origin norms to ensure third-country goods don’t enter the bloc through India, particularly in sensitive categories such as agricultural products, spirits, wines, and other products with Geographical Indication (GI) status prized for their cultural and commercial value.

“Rules of origin remain the most politically sensitive chapter for the EU, with India seeking flexibility to support its export competitiveness," said the first person mentioned above. The Indian team will push for a balanced framework that protects the domestic industry while accommodating European concerns, said this person.

India has fast-tracked negotiations to strike free-trade pacts with its large trading partners, even as it seeks to thrash out differences with the US after President Donald Trump’s 50% tariffs on Indian goods. Bilateral trade between India and the European Union touched around $136.5 billion ( ₹11.6 lakh crore) in 2024-25, accounting for 10% of India’s global trade and making it one of the country’s largest trading partners. During this period, India exported goods worth about $75.8 billion, while imports stood at $60.7 billion.

“Robust and enforceable rules of origin would help stop third-country products from entering India through indirect routes, which often leads to unfair competition and loss of revenue," said Indian Alcoholic Beverage Companies (CIABC) director general Anant S. Iyer.

“In the case of alcoholic beverages, especially Geographical Indication (GI)-tagged products like Scotch Whisky, Irish Whiskey, Cognac, Champagne, or Tequila, the GI-linked country should be recognized as the true country of origin for tariff purposes, regardless of where the shipment originates," Iyer said. “This is vital to preserve the authenticity of such products and uphold the integrity of trade commitments."

“Non-originating material (NOM) should not exceed 5% of the volume of the total alcoholic strength of the good," Iyer said. “This is recommended because of the undefined status of borders between Northern Ireland (part of the UK FTA) and the Republic of Ireland (part of the EU) that could result in an influx of Irish Whisky from non-EU regions governed under a separate FTA."

NOM refers to any input, component, or raw material used in producing a good that does not originate from the country claiming preferential trade benefits.

Another sticking point between New Delhi and Brussels is the acceptance of each other’s agricultural products. In the absence of a mutual recognition arrangement, food and farm exports face repeated testing and certification, lengthening clearance times and driving up compliance costs. Agriculture is among the toughest chapters to close in the negotiations.

Intense negotiations

According to information reviewed by Mint, 14 rounds of negotiations between India and the EU have been completed so far, with the latest round held from 6 to 10 October in Brussels.

The latest round spanned 12 policy areas across 91 technical sessions, covering market access for goods and services, sanitary and phytosanitary standards (SPS), technical barriers to trade, and the rules of origin chapter.

The India–EU trade talks cover 23 policy chapters, covering trade in goods and services, investment protection, sanitary and phytosanitary standards, technical barriers to trade, and the rules of origin.

The negotiations also span customs procedures, competition policy, trade defence, government procurement, dispute settlement, geographical indications, and sustainable development, reflecting the breadth and complexity of what both sides aim to make a landmark agreement.

Commerce secretary Rajesh Agarwal and the Director General for Trade, EU, Sabine Weyand, also held a stocktaking meeting during the round to assess progress and provide strategic direction on unresolved issues.

The previous round, which took place in September, was followed by a high-level dialogue between India’s commerce and industry minister and the EU Trade and Agriculture Commissioners to fast-track the talks and address agricultural sensitivities and regulatory hurdles that have slowed progress.

“Both sides are keen to achieve a broad consensus before December, though differences remain over tariff cuts on automobiles and premium spirits, areas where the EU is seeking steep reductions, while India wants better access for textiles, leather, and engineering goods in the European market," the second person mentioned above said.

Once concluded, the India-EU trade pact will be among India’s most comprehensive, spanning goods, services, investment, and intellectual property.

For India, the FTA with the EU represents a critical step in diversifying exports and deepening economic engagement with key partners amid a fracturing global trade order.

Spokespersons of the commerce ministry didn’t respond to emailed queries.

In response to a query, Olof Gill, European Commission spokesperson for trade, said, “Some progress was made in outstanding areas, in particular on the SPS chapter, which was closed."

“Negotiators also had detailed discussions on their respective offensive and defensive interests in market access for goods, both in the industrial and agriculture sectors. As in previous rounds, the focus of negotiators was on the core pillars of a future agreement, with the aim to get closer to an economically meaningful market access package," said Gill.

“Teams will continue working at intense pace during the upcoming weeks, while intensive engagement at chief negotiators’ level will take place in a continuous manner both in virtual and in-person format, in Brussels and New Delhi, with the participation of technical experts," Gill said. “Political engagement will also continue between commissioner Šefčovič and minister Goyal," Gill said, adding, “Therefore, no further fully-fledged round of negotiations has been scheduled for the time being."

Pharma to textiles await FTA boost

The Global Trade Research Initiative (GTRI) has said that the prolonged India–EU trade negotiations underscore the challenge of aligning divergent economic interests, but with renewed political will, the proposed Broad-based Trade and Investment Agreement (BTIA) could be sealed, marking a new phase of economic partnership.

A well-designed pact would lower tariffs, expand market access, and harmonize regulations across sectors such as technology, pharmaceuticals, automobiles, and textiles, GTRI said in a report. “Lower tariffs will make Indian exports such as garments, pharmaceuticals, steel, petroleum products, and electrical machinery more competitive in the EU. Similarly, Indian services exports, including telecommunications, business services, and transport, are expected to grow significantly."

“The EU, in turn, will benefit from higher exports of aircraft and parts, electrical machinery, diamonds, and chemicals to India. European service sectors such as intellectual property, business services, and IT & telecommunications will also see gains," it added.

According to Rajeev Gupta, joint managing director at RSWM Ltd, “The India-EU trade agreements can give the textile sector a strong competitive edge. By opening new markets and reducing trade barriers, they will help balance domestic priorities with export growth."

The free-trade pack will “not only reduce duties but also create opportunities for ESG-aligned sourcing, which is becoming a global priority", Gupta said. “This will further strengthen India’s position in global textile value chains, driving sustainable growth and long-term benefits for all stakeholders."