Trade negotiations between India and the 27-nation European Union have entered their most challenging phase. Commerce Secretary Rajesh Agrawal noted that both sides are currently discussing difficult issues, including the EU’s Carbon Border Adjustment Mechanism (CBAM). The 16th round of negotiations concluded earlier this month, covering goods, services, and investment.
India has strongly objected to EU regulations like CBAM and the Deforestation Regulation (EUDR). Under CBAM, Indian exports of steel, aluminum, and cement could face significant tariffs of 20-35%. Despite these obstacles, Agrawal stated that teams are working tirelessly to narrow differences and close the deal.
The EU is India’s largest trading partner for goods, with bilateral trade reaching $136.53 billion in 2024-25. While the EU is demanding duty cuts for automobiles, spirits, and medical devices, an FTA could make Indian exports like garments and pharmaceuticals more competitive. Agrawal clarified that no chapters have been dropped from the 23 policy areas under negotiation as of yet.