India,EU broaden trade talks to seal FTA by 2025. Detailed negotiations are taking place on both sides to find a fix for lingering problems, especially around steel, cars and carbon border adjustment mechanisms. The talks are dominated by quest for a well-balanced and equitable agreement, sensitive to the concerns of both sides, underlining tariff as well non-tariff barriers.
Current Status of India-EU Trade Talks
- The visit of Goyal came in the backdrop of leadership transition in the EU and saw both sides discuss remaining issues such as that on steel and automobile. Each side is searching for “possible landing zones” to bridge the gaps before the year-end deadline.
- The EU wants a scrapping or deep cut in tariffs on car imports into India currently running at more than 100%, with a phased reduction to about 10%. India is expected to consider a graduated reduction mechanism as it had in the case of its earlier agreement with the UK but intends to shield its domestic automotive industry, particularly electric vehicles at least for now.
- India has complained against the EU safeguard duties on certain steel products (now at an out-of-quota duty of 25% extended till 2026). India has claimed these safeguard actions violate WTO rules and it is proposing to levy retaliatory tariffs on some EU imports, citing loss of trade amounting to more than $1 billion per year from the safeguards.
- Both sides recognize that delivering solutions to steel, autos and carbon taxes is key as these are sensitive issues requiring more negotiation.
Key Points of Contention
- Steel: The European Union’s long safeguard duties on steel impact India’s exports of the same and India seeks to propose counter tariffs. India demands withdrawal or changes in these safeguard duties.
- Cars: The EU wants large cuts in tariffs on the imports of cars; India is being careful to use these negotiations in order to achieve a balance between access for European cars and protection for Indian car makers, as well as ensuring growth in EV sales.
- Carbon Border Adjustment Mechanism (CBAM): There is no forward movement on its implication to EU levies of carbon on Indian exports like steel aluminum, cement.
Both India And EU are committed to concluding the FTA at the earliest by the deadline of end-2025 and this is supported by political guidance from leaders such as PM Narendra Modi and European Commission President Ursula von der Leyen. The agreement pursues fairness, transparency and greater market access, while acknowledging each other’s economic and regulatory sensitivities.