An agreement could follow on Tuesday after a meeting between Prime Minister Narendra Modi, European Council President António Costa, and Commission President Ursula von der Leyen.
Negotiations with India resumed in 2022 after a nine-year hiatus. Talks received a boost last year after US President Donald Trump raised import tariffs. Trade between India and the EU amounted to 116.6 billion euros last year, making the 27-country EU bloc one of India’s largest trading partners.
Due to the tariff hikes by Trump, many countries are working to reduce their dependence on the United States by making new trade agreements with other nations. The EU is currently also busy with a new treaty with Australia, following earlier agreements with Indonesia, Mexico, and Switzerland. In the same period, New Delhi concluded agreements with Great Britain, New Zealand, and Oman.
During the World Economic Forum last week in Davos, Von der Leyen said the EU is close to an agreement, although ‘there is still some work to do.’ After signing, the agreement still needs to be ratified by the European Parliament, a process that can take at least a year.
Last week, the European Parliament decided to forgo ratification of a major trade agreement with some South American countries because it first wants legal advice from European judges on the legal basis of the Mercosur treaty. European farmers are especially opposed to allowing more competitors into their market.
Not all obstacles in the new India agreement have been overcome. Negotiators are still trying to reach an agreement on several sensitive issues. This includes India’s reluctance to significantly lower import tariffs on European cars.
According to the Indian Ministry of Commerce, some sensitive agricultural products are excluded from the negotiations.
UPDATE 10:41 hrs: Both delegations have confirmed that they have reached agreement on what is called the biggest free trade agreement so far. They refer to it as the 'mother of all treaties.' For some agricultural products, maximum quotas and a 'safeguard clause' have been included.