India, EU trying to narrow differences on trade pact: Commerce Secy

Commerce Secretary Rajesh Agrawal on Monday said the negotiations between India and the 27-nation bloc EU have entered the “most difficult” stage and both sides are engaged to bridge the differences and close the talks soon. He said that

the European Union’s (EU) carbon border adjustment mechanism (CBAM) is on the discussion table.

“We are in the most difficult stage, most difficult issues are on the table...we are trying to ease that out wherever we are finding a fine balance. There is a set of issues on the table... CBAM is definitely on the table,” he told reporters here. The 16th round of negotiations between the two sides concluded earlier this month (3 — 9 December) here.

Key chapters such as goods, services, investment, rules of origin and technical barriers to trade were discussed. “We are narrowing down the differences... we are working tirelessly to close the talks,” Agrawal said, When asked if both sides are considering dropping a few chapters to close the deal early, the secretary said that the decision will be taken at the last moment.

“I do not think we are dropping (any chapter) as of now. Whatever is on the table is on the table. But in case, in the interest of agreement at some point in time, we feel that there are certain issues or areas that need to be dropped, may be (dropped). That call will be taken at the level of either chief negotiators or my ministers or my level, but that is not the stage we are at,” he said. On the December deadline for conclusion of the negotiations, the secretary said there are internal time lines, and it does not mean things will stop if it is not met. Both sides have reaffirmed their commitment to bridging the remaining gaps and concluding a balanced and mutually beneficial FTA (free trade agreement) at the earliest. The EU has announced regulations such as CBAM and EUDR (Deforestation Regulation) which have been strongly objected to by India.

Under CBAM, Indian exports of steel, aluminium, and cement to the EU could face tariffs of 20-35 per cent.In June 2022, India and the EU bloc resumed negotiations for a comprehensive FTA, an investment protection agreement and a pact on geographical indications after a gap of over eight years. It was stalled in 2013 due to differences on the level of opening up markets.

India’s bilateral trade in goods with the EU was $136.53 billion in 2024-25 (exports worth $75.85 billion and imports worth $60.68 billion), making it the largest trading partner for goods. The EU market accounts for about 17 per cent of India’s total exports and the bloc’s exports to India constitute 9 per cent of its total overseas shipments.

Besides demanding significant duty cuts in automobiles and medical devices, the EU wants tax reduction in other products like wine, spirits, meat, poultry and a strong intellectual property regime. Indian goods’ exports to the EU, such as ready-made garments,

pharmaceuticals, steel, petroleum products and electrical machinery, can become more competitive if the pact sails through.The India-EU trade pact negotiations cover 23 policy areas or chapters, including trade in goods, services, investment, trade remedies, rules of origin, customs and trade

facilitation, competition, Government procurement, dispute settlement, intellectual property rights, geographical indications and sustainable development.