India and EU Consider Phased Free Trade Agreement Amid Global Tariff Surge:

India and the European Union are exploring a phased negotiation model for their proposed Free Trade Agreement (FTA), an Indian official confirmed. The two sides are considering breaking the talks into stages, similar to the method used in India’s FTA with Australia, to facilitate progress on easier areas while leaving more complex issues for later discussions.

This development follows the 10th round of negotiations in Brussels last month. The next round is scheduled for May 2025 in India.

Renewed Momentum in Talks

Following the visit of European Commission President Ursula von der Leyen and EU Commissioners to India, the pace of negotiations has picked up. The renewed urgency stems from global economic uncertainty, especially after sweeping tariffs were imposed by U.S. President Donald Trump on April 3, creating disruptions in international trade.

India and the EU resumed FTA discussions in June 2022 after an eight-year break due to previous disagreements over market access and trade standards. The comprehensive negotiations now cover 23 chapters, including:

Trade in Goods and Services

Investment and Trade Facilitation

Intellectual Property Rights

Sanitary and Phytosanitary Measures

Government Procurement

Sustainable Development

Geographical Indications

Key Demands and Potential Gains

The EU seeks lower tariffs on key exports such as automobiles, medical devices, wines, and spirits, along with enhanced IP protection standards. For India, a successful deal could increase competitiveness for exports like:

Pharmaceuticals

Readymade garments

Petroleum products

Steel

Electrical machinery

In 2023-24, bilateral trade in goods reached USD 137.41 billion (exports: USD 75.92 billion; imports: USD 61.48 billion), making the EU India's largest trading partner. Additionally, services trade stood at USD 51.45 billion in 2023.

India-EFTA TEPA Agreement Moving Toward Implementation

Meanwhile, progress is also being made on the Trade and Economic Partnership Agreement (TEPA) between India and the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland, and Liechtenstein.

Signed on March 10, 2024, the TEPA pact includes a commitment of USD 100 billion in investments over 15 years from EFTA to India. In return, India will reduce or eliminate duties on several premium imports such as Swiss watches, chocolates, and polished diamonds.

All EFTA member parliaments have approved the agreement. Switzerland’s final ratification is pending a mandatory public referendum. Both sides aim to implement the agreement by the end of 2025.