India and the EU on track to conclude a massive trade agreement

Indian and European authorities have completed negotiations on a free trade agreement that has been awaited for nearly 20 years, a text described as historic by both parties and set to be officially announced in the coming days. The agreement provides for extensive liberalisation of trade in goods between India and the 27 Member States of the European Union, two entities that together account for around a quarter of global gross domestic product and a market of nearly two billion consumers.

According to the Indian trade secretariat, the legal verification phase is expected to take five to six months before formal signing, with entry into force envisaged within a year. Indian officials speak of a balanced and forward-looking agreement designed to strengthen economic integration, stimulate trade flows and encourage two-way cross-investment.

Bilateral trade reached $136.5 billion in the fiscal year ending March 2025, making the European Union India's largest trading partner. The agreement is expected to further open up India's vast, long-protected market to European products, while facilitating access for Indian exports to the EU market.

This compromise is part of an accelerated sequence of trade diplomacy. A few days earlier, the European Union had signed a major agreement with Mercosur, after more than 25 years of negotiations, and had already concluded agreements with Indonesia, Mexico and Switzerland in 2025. For its part, New Delhi recently finalised agreements with the United Kingdom, New Zealand and Oman, confirming an active strategy of diversifying its partnerships.

The geopolitical environment is weighing heavily on this dynamic. Tensions with the United States, marked by tariff threats and the recent failure of a proposed bilateral Indo-American agreement, have prompted India and the European Union to accelerate the conclusion of this dossier. Discussions were relaunched in 2022 after a nine-year hiatus, then intensified last year following a joint decision by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen to move into fast-track mode.

The last few months have been dominated by sensitive trade-offs. The European Union was demanding substantial reductions in Indian customs duties on automobiles, which can exceed 100%, while India was seeking a relaxation of European restrictions on steel imports, a strategic sector for its industry. According to recent reports, New Delhi has committed to reducing tariffs on European cars by up to 40%, down from previous levels of up to 110%.

However, certain sectors have remained outside the scope of liberalisation. Agricultural and dairy products deemed sensitive were excluded, with India asserting the need to protect millions of small farmers and preserve fragile social balances. This red line was one of the constant points of India's position throughout the negotiations.

The conclusion of this agreement marks a major step in redefining the trade balance between Europe and South Asia. For Brussels, it is a question of consolidating privileged access to one of the world's most dynamic markets. For New Delhi, the challenge is to anchor its integration into global value chains in a sustainable manner, while reducing its dependence on partners that have become more unpredictable. Reuters

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IN SHORT
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🇨🇳 China • President Xi Jinping extends his sweeping anti-corruption purge to his inner circle by targeting General Zhang Youxia, vice-chairman of the Central Military Commission and a long-time ally. Experts believe that this decision further strengthens the concentration of power around Xi, weakens the military chain of command and reduces the likelihood of swift action against Taiwan, giving time to rebuild a loyal and competent leadership.

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