Negotiators from the European Union and India said this week that a free trade agreement first proposed in 2007 is close to being finalised, with automobile import tariffs and dairy market access the two issues still unresolved. According to a joint statement issued after the latest round of talks in Brussels, both sides aim to close the remaining gaps before the next EU-India leaders' summit, though officials stopped short of naming a signing date.
The agreement would cover a market of roughly 450 million EU consumers and 1.4 billion people in India, a scope that has kept negotiations running, with a multi-year pause between 2013 and 2022, longer than almost any trade pact either side has pursued. During a visit to New Delhi in early 2025, European Commission President Ursula von der Leyen and Indian Prime Minister Narendra Modi set an end-of-2025 target for conclusion, and talks resumed on that basis. That deadline passed without a deal, and negotiators have since met in Brussels and New Delhi on a roughly monthly basis to narrow the remaining disagreements.
Automobile tariffs the sharpest dividing line
India currently applies import duties of up to 100 percent on fully built passenger cars, a rate the European Automobile Manufacturers' Association has long identified as the single largest barrier to EU exports in the Indian market. Modelled loosely on the tariff schedule India agreed with the United Kingdom in the Comprehensive Economic and Trade Agreement signed last year, Brussels wants a phased reduction that would cut duties on a quota of UK-built vehicles over a ten-year period. Indian officials have signalled openness to a similar structure but are pushing for a longer phase-in and a lower import quota, according to a person familiar with the talks cited in Indian financial media this week.
Dairy remains the more politically sensitive item, with India having kept the sector closed in nearly every trade agreement it has signed, citing the roughly 80 million households that depend on small-scale milk production. In 2019, New Delhi cited that same reasoning when withdrawing from the Regional Comprehensive Economic Partnership. European dairy exporters, led by producers in Ireland, the Netherlands and France, want at least limited access for cheese and milk powder. Even so, Indian trade officials have not moved from their position that dairy will stay outside the agreement entirely, and EU negotiators are said to be weighing whether to accept that exclusion in return for gains elsewhere, including in pharmaceuticals, textiles and IT services.
A deal built on the UK precedent
The India-UK agreement, in force since 2025, has become the reference point both sides cite in the Brussels talks — Indian negotiators point to it as proof a workable compromise on autos exists, while EU officials use it to argue India can go further given the size of the European market. According to European Commission figures, bilateral trade between the EU and India was worth close to 125 billion euros last year, making the EU India's largest trading partner ahead of the United States and China.
Officials from both sides are scheduled to meet again in New Delhi in September, with a further round tentatively planned in Brussels before the end of the year.