Trade negotiators from India and the European Union are no longer confident they can finalize a long-awaited free trade agreement by the end of the year, with discussions stalled over sensitive sectors including automobiles and steel, according to people familiar with the matter cited by Bloomberg. The delay underscores the political and technical challenges facing one of the world’s most complex trade negotiations.
Bloomberg reported that talks are now expected to stretch into next month, with both sides hoping to clinch a deal that could be announced when European Commission President Ursula von der Leyen leads a delegation to New Delhi in January. Indian Prime Minister Narendra Modi and von der Leyen had agreed in February to conclude the agreement before the end of this year, raising expectations that negotiators are now struggling to meet.
While India and the EU renewed political momentum after the summer break, key technical issues remain unresolved. People familiar with the talks told Bloomberg that the final agreement is likely to be narrower in scope and ambition than other trade deals the EU has concluded in recent years, reflecting compromises needed to bridge remaining gaps.
The most contentious areas center on automobiles and steel. The EU is pressing India to expand a quota of roughly 80,000 cars that European manufacturers could export to India under reduced tariffs, according to some of the sources. India, meanwhile, is seeking lower duties on certain steel exports to Europe and greater flexibility around the EU’s carbon border tax rules, which New Delhi argues could disadvantage its producers.
European Commission spokesperson Olof Gill said EU trade chief Maros Sefcovic visited India earlier this month to advance the negotiations, following what he described as intensive technical-level discussions. Gill said engagement would continue with the aim of meeting the objective of finalizing talks by the time of the next EU-India summit. India’s Ministry of Commerce and Industry did not immediately respond to a request for comment.
The free trade agreement has been under negotiation for nearly two decades, but Bloomberg noted that talks gained renewed urgency this year after U.S. President Donald Trump returned to the White House and imposed sharply higher tariffs that disrupted global trade flows. A 50% U.S. tariff on Indian goods has hit India’s export industries hard, pushing Modi’s government to accelerate efforts to secure alternative markets.
Commerce Minister Piyush Goyal said during a visit to Brussels in October that India and the EU had significantly narrowed their differences. At the same time, India has fast-tracked negotiations with several other partners, including New Zealand, Chile, Peru and Oman, to offset reduced access to the U.S. market. Modi is expected to visit Oman next week, while New Zealand’s trade minister is currently in India for another round of talks. India finalized a trade agreement with the United Kingdom in July, eliminating tariffs on products ranging from cars to alcohol.
Bloomberg reported that the EU, for its part, is also pushing to deepen trade and strategic partnerships worldwide as it seeks to diversify away from reliance on the United States and China, its two largest trading partners. Even so, the bloc is struggling to conclude by year-end its landmark trade agreement with the Mercosur countries of Argentina, Brazil, Uruguay and Paraguay, the largest deal it has ever negotiated after 25 years of talks.
