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The EU-India Free Trade Deal: Racing Toward a January Finish

The EU-India Free Trade Deal: Racing Toward a January Finish

After 19 years of false starts, Europe and India rush to sign a $120 billion trade pact by month's end

Today: Merz Announces January 27 Target Date

Overview

German Chancellor Friedrich Merz stood in Ahmedabad on January 12 and announced what negotiators barely dared hope: the EU and India could sign a comprehensive trade deal by January 27, when EU leaders Ursula von der Leyen and António Costa arrive for India's Republic Day parade. After 19 years, 14 formal rounds of talks, and countless missed deadlines, the world's second and ninth-largest trading partners are sprinting toward a finish line that's eluded them since 2007.

The deal would erase tariffs on $120 billion in annual goods trade and reshape supply chains at a moment when both sides desperately need alternatives. India faces 50% U.S. tariffs on select exports and needs new markets. Europe, burned by reliance on China and Russia, wants a democratic manufacturing partner. But carbon taxes on steel, 100%+ Indian tariffs on European cars, and IT worker visa access still threaten to derail what would be the EU's largest bilateral agreement since Japan in 2019.

Key Indicators

€120B
Annual bilateral trade at stake
EU is India's second-largest trading partner; deal would be EU's biggest since Japan EPA
19 years
Since negotiations began
Started 2007, stalled 2013, relaunched 2022 after nine-year freeze
14 rounds
Formal negotiation sessions since 2022
Accelerated from 3 rounds/year in 2022-23 to monthly sessions in 2025
Jan 27
Target signing date
Von der Leyen and Costa to attend India-EU summit after Republic Day

People Involved

Friedrich Merz
Friedrich Merz
Chancellor of Germany (Made public announcement about potential January 27 signing during India visit)
Narendra Modi
Narendra Modi
Prime Minister of India (Leading India's push to finalize FTA with EU amid U.S. trade tensions)
Ursula von der Leyen
Ursula von der Leyen
President of the European Commission (Expected to travel to India on January 27 for potential signing ceremony)
António Costa
António Costa
President of the European Council (Expected to co-sign EU-India trade agreement alongside von der Leyen)
Piyush Goyal
Piyush Goyal
India's Minister of Commerce and Industry (Lead negotiator declaring agreement in 'final stages')
Maroš Šefčovič
Maroš Šefčovič
EU Commissioner for Trade and Economic Security (Lead EU negotiator in final push to resolve carbon tax and tariff disputes)

Organizations Involved

European Commission
European Commission
Supranational Executive Body
Status: Leading EU side of negotiations through Directorate-General for Trade

The EU's executive arm negotiates all trade agreements on behalf of 27 member states.

Ministry of Commerce and Industry (India)
Ministry of Commerce and Industry (India)
Government Ministry
Status: Leading India's negotiating team across 23 policy chapters

Negotiates all of India's trade agreements and manages export promotion strategy.

Timeline

  1. Merz Announces January 27 Target Date

    Announcement

    German Chancellor declares in Ahmedabad that EU-India FTA could be signed by month's end during von der Leyen-Costa summit.

  2. Brussels Marathon Negotiations

    Ministerial

    Goyal and Šefčovič conduct 'intense two-day marathon' in Brussels. Both direct teams to resolve pending issues and expedite.

  3. Von der Leyen and Costa Invited as Republic Day Guests

    Political

    India invites both EU presidents as chief guests for January 26 parade, signaling intent to sign deal.

  4. Šefčovič-Goyal Delhi Meetings

    Ministerial

    EU Trade Commissioner and Indian Commerce Minister hold two days of talks. Agrawal warns of 'toughest phase.'

  5. Intensive Delhi Negotiating Week

    Negotiation

    Senior EU negotiators spend November 3-7 in New Delhi for marathon sessions on remaining issues.

  6. U.S. Imposes 50% Tariffs on India

    External Pressure

    Trump administration hits select Indian exports with punitive duties over Russian oil purchases, accelerating India's EU pivot.

  7. Round 11 Closes Several Chapters

    Negotiation

    New Delhi session successfully concludes transparency, regulatory practices, customs, IP rights, and mutual assistance provisions.

  8. Entire European Commission Visits India

    Political

    Von der Leyen leads unprecedented trip of all commissioners to New Delhi, first outside Europe. Leaders commit to conclude by year-end.

  9. Ninth Round in New Delhi

    Negotiation

    Talks continue but miss informal 2024 completion target. Multiple chapters still open.

  10. EU-India Trade and Technology Council Established

    Institutional

    New high-level forum created to coordinate on tech standards, supply chains, and strategic trade issues.

  11. First Round in New Delhi

    Negotiation

    Negotiations restart with Round 1 covering initial positions across 23 policy chapters.

  12. Formal Relaunch of FTA Talks

    Negotiation

    EU officially relaunches negotiations on three parallel tracks: trade, investment protection, and geographical indications.

  13. Leaders Agree to Resume Negotiations

    Political

    EU and Indian leaders commit to restart FTA talks plus separate investment and geographical indications agreements.

  14. Talks Stall and Freeze

    Breakdown

    After 16 rounds, negotiations collapse over IP rights, tariffs, and regulatory issues. Nine-year hiatus begins.

  15. EU-India FTA Negotiations Launch

    Negotiation

    First attempt at comprehensive trade agreement begins in Brussels.

Scenarios

1

Deal Signed January 27, Ratification Follows

Discussed by: Chancellor Merz, Commissioner Šefčovič, and Indian trade officials in public statements; endorsed by German business lobby and analyzed by Bruegel, Carnegie Endowment

Von der Leyen and Costa arrive in New Delhi with a finalized text. They sign at the January 27 summit, creating headlines about Europe and India defying U.S. protectionism. The Commission then spends six months navigating European Parliament approval and member state ratification. French farmers protest but lack veto power under qualified majority voting. The deal provisionally applies by mid-2026, like CETA did, while formal ratification drags into 2027. German automakers gain phased tariff cuts on exports to India; Indian IT firms get easier temporary work visas to Europe; both sides agree on carbon tax implementation timelines that don't cripple Indian steel. Trade flows begin shifting immediately.

2

Signing Delayed, Negotiations Continue Past Summit

Discussed by: European Council on Foreign Relations, trade analysts citing CBAM disputes and French agricultural concerns

One or two sticking points remain unresolved when von der Leyen and Costa land in Delhi. They attend Republic Day ceremonies but leave without signatures, promising 'substantial progress' and a 'breakthrough soon.' Carbon border taxes, Indian tariffs on dairy or spirits, or IT visa quotas remain contested. Negotiations stretch into March or April 2026. Domestic opposition builds on both sides—Indian steel producers mobilize against CBAM compliance costs, French farmers block highways over import fears. The window closes as both sides turn to other priorities. The deal joins TTIP and EU-Australia in the graveyard of 'nearly done' agreements that never materialized.

3

Limited Deal on Goods, Services and Investment Deferred

Discussed by: Trade analysts at PIIE and Centre for European Reform suggesting a CETA-style phased approach

Facing a hard deadline with political capital invested in the summit, negotiators agree to split the package. They sign a tariff-reduction agreement covering goods trade, leaving contentious services market access, investment protection, and geographical indications for later rounds. This mirrors how the EU separated CETA from a parallel investment court system. Both sides declare victory—'largest goods FTA ever' trumpets Brussels; 'major market access for exports' says Delhi. But the incomplete deal leaves IT worker mobility unresolved, frustrating India's services exporters, and defers carbon tax compromises that remain explosive. It's progress, not transformation.

4

Talks Collapse Over Carbon Taxes or Tariffs

Discussed by: Skeptics citing TTIP precedent and current India-EU disagreements analyzed by Indian think tanks and European agricultural lobbies

The January 27 summit becomes a diplomatic embarrassment. Despite 19 years and 14 rounds, core incompatibilities prove insurmountable. India refuses to accept carbon border taxes without exemptions for its domestic climate efforts; Europe won't budge on CBAM integrity. Or India won't cut tariffs below 50% on European cars and dairy; Germany and France walk away. Von der Leyen and Costa attend Republic Day but announce talks are 'on pause pending further alignment.' The failure mirrors TTIP's 2016 collapse when public opposition and regulatory gaps killed U.S.-EU ambitions. Both sides pivot to other partners—India focuses on deals with UK and ASEAN; EU pursues Latin America and Africa.

Historical Context

EU-Japan Economic Partnership Agreement (EPA)

2013-2019

What Happened

After Japan dropped long-standing objections to agricultural market opening, the EU and Japan concluded negotiations in 2017 and implemented their FTA in February 2019. It became the EU's largest bilateral trade deal by market size, covering close to 30% of global GDP. Negotiations took six years from mandate to signature.

Outcome

Short Term

The agreement eliminated tariffs on 99% of goods and opened services markets, with preference utilization reaching 70.3% for Japanese exporters.

Long Term

Established template for EU 'new generation' FTAs with deep regulatory cooperation beyond tariff cuts, influencing subsequent EU negotiations including with India.

Why It's Relevant Today

The EU-India deal would be comparable in market size and complexity. If concluded by January 27, it would follow a similar but faster trajectory than Japan—six years from 2007 launch to 2013 stall, then four years from 2022 relaunch to 2026 completion.

EU-Canada CETA Agreement

2009-2017

What Happened

Canada and the EU negotiated for five years (2009-2014), signed in 2016, and provisionally applied CETA in September 2017 while member state ratification continued. The deal faced fierce opposition from civil society groups fearing regulatory 'race to the bottom' and agricultural imports. Belgium's Wallonia region nearly vetoed it before last-minute compromises.

Outcome

Short Term

Provisional application allowed immediate tariff cuts and trade flow increases, though preference utilization lagged Japan and Korea.

Long Term

Set precedent for 'provisional application' before full ratification, a model the EU-India deal may follow given likely French and agricultural opposition.

Why It's Relevant Today

CETA shows how the EU can implement major trade deals provisionally despite domestic opposition, using qualified majority voting to override single-country vetoes. If France objects to EU-India, Brussels has a roadmap to proceed anyway.

TTIP (Transatlantic Trade and Investment Partnership) Collapse

2013-2016

What Happened

The U.S. and EU conducted 14 negotiating rounds but failed to agree on a single chapter. Public support collapsed—only 17% of Germans backed it by 2016, down from 55% earlier. Regulatory divergence on food safety, chemical standards, and dispute resolution proved unbridgeable. Brexit and Trump's election killed remaining momentum in 2016.

Outcome

Short Term

Complete failure to conclude agreement, marking the end of U.S.-EU mega-regional trade ambitions.

Long Term

Demonstrated that public opposition, regulatory incompatibility, and political timing can doom even the most ambitious trade talks despite strong elite support.

Why It's Relevant Today

TTIP's collapse over regulatory standards and public backlash serves as a warning. The EU-India deal faces similar pressures—carbon taxes mimic TTIP's regulatory disputes, and French farmer protests echo TTIP's public opposition. The difference: geopolitical urgency in 2026 (U.S. tariffs, China tensions) that didn't exist in 2016.

15 Sources:
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Euronews The Tribune EU Today India Briefing India-EU Trade Council European Parliament Business Today Business Standard European Commission Organiser Alcircle Wikipedia NPR Bruegel India-EU Trade Council