India and the European Union (EU) will commence their 10th round of negotiations for a proposed free trade agreement (FTA) in Brussels tomorrow. The talks will focus on key issues such as agricultural tariffs, auto import duties, and regulatory barriers, with hopes to finalize the deal by the end of the year.
India-EU Trade Pact Discussions
The negotiations were fueled by the recent visit of EU Commissioner for Trade and Economic Security Maros Sefcovic. Both sides discussed steps to accelerate efforts toward a balanced and mutually beneficial trade pact. PM Narendra Modi and European Commission President Ursula von der Leyen had agreed last month to conclude the ambitious India-EU free trade deal by this year, amid fears of the Donald Trump administration's threat of higher tariffs.
Stalled Negotiations and Key Sticking Points
Negotiations between India and the EU resumed in June 2022 after a gap of over eight years due to differences over market access. Apart from the FTA, both sides are negotiating an investment protection agreement and a deal on Geographical Indications (GIs). According to the Global Trade Research Initiative (GTRI), agricultural tariffs—especially on dairy and wine import duties, auto tariffs, and regulatory barriers affecting labor-intensive goods—are some major sticking points.
Trade Balance and Agricultural Tariffs
In FY 2024, bilateral trade exceeded $190 billion. India exported $76 billion worth of goods and $30 billion worth of services to the EU, while the latter exported $61.5 billion worth of goods and $23 billion worth of services to India. Agriculture continues to be a sensitive area in negotiations as the EU is eyeing lower tariffs on cheese and skimmed milk powder, which India presently shields with high duties to protect its domestic dairy industry.
European Winemakers Seek Greater Access to the Indian Market
European winemakers are eyeing greater access to the Indian market, where imported products currently face a 150% tariff. The EU wants India to eliminate or significantly lower these duties to 30-40%. India might consider aligning with what it offered to Australia under the India-Australia Economic Cooperation and Trade Agreement (ECTA), where taxes on wines were slashed to 50% over 10 years.
Opening India’s Dairy Sector for High-Value Dairy Ingredients
As part of the negotiations, there is a growing discussion around India opening its dairy sector selectively for high-value dairy ingredients. Similar to the provisions under the India-Australia trade pact, where infant formula tariffs were gradually reduced, India may consider allowing limited imports of premium dairy ingredients such as whey protein, lactose, and specialized milk protein concentrates. These products are primarily used in pharmaceuticals, infant nutrition, and high-end food processing, rather than competing directly with domestic dairy farmers.
Such an approach could enable India to maintain its strong protective stance on essential dairy products like milk and butter, while simultaneously fostering trade growth in the value-added dairy segment. This move could also encourage technology transfer and foreign investment in India's dairy processing sector, potentially benefiting Indian dairy cooperatives in the long run.
Conclusion
As the India-EU trade negotiations progress, the stakes remain high for both sides. While the EU seeks greater access to India's wine and dairy markets, India aims to secure investment protection and technology-driven trade benefits. The possibility of selectively opening India’s dairy sector for high-value ingredients presents a viable middle ground. With a deadline set for the end of the year, the coming months will determine whether both parties can find a mutually acceptable resolution or if trade hurdles will continue to delay the long-anticipated deal.
References
[1] Reuters (2025) ‘India and EU Trade Talks to Resume in Brussels’, Reuters Business News, 9 March.
[2] Global Trade Research Initiative (GTRI) (2025) ‘Challenges in India-EU Trade Pact Negotiations’, GTRI Reports.
[3] European Commission (2025) ‘EU-India Economic Relations and Trade Developments’, Brussels Economic Review.
[4] Ministry of Commerce, India (2025) ‘Overview of India’s Trade Policy and Agreements’, Government of India.
