What happened?
On 28 February 2025, Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed to push for the conclusion of the India-EU Free Trade Agreement (FTA) within the year. Speaking in New Delhi ahead of talks with Modi, von der Leyen called for an “ambitious” deal covering key sectors such as semiconductors, pharmaceuticals, clean hydrogen, and defence. Talks, which resumed in 2021 after an eight-year pause, remain stalled over tariff issues and market access demands.
Why it matters to India?
The EU is India’s largest trading partner, with bilateral trade reaching $137.5 billion in 2023-24. A successful FTA could unlock new export opportunities for Indian businesses while ensuring greater access to European markets. However, key challenges, including high EU tariffs on Indian goods and India’s reluctance to reduce duties on automobiles and alcohol, need resolution. A deal would strengthen India’s trade resilience amid shifting global supply chains and protectionist trends.