India and the European Union (EU) appear to be firmly on track to meet their year-end deadline to conclude free trade agreement (FTA) negotiations.

The talks are progressing against the backdrop of the pressure being exerted by US tariffs. Washington's approach under President Donald Trump has signaled a shift in the international order, encouraging the EU and India to cement reliable alliances and stable trade partnerships.

"We are now maximizing our efforts to finalize negotiations by the end of the year," said European Trade Commissioner Maros Sefcovic, who was on a visit to India last week.

Indian Commerce Minister Piyush Goyal was similarly optimistic: "India and the EU complement each other and offer great opportunities on both sides."

After constructive talks with Goyal, Commissioner for Agriculture and Food Christophe Hansen stressed the commitment to secure "a balanced EU-India FTA that delivers for people, farmers and businesses on both sides," highlighting agriculture's central role in the negotiations.

Although the talks appear to be moving toward the finish line, Gulshan Sachdeva, an EU expert from Jawaharlal Nehru University, remains cautious.

"While statements from both sides reflect growing optimism, the India-EU trade deal is not done until it is truly done," Sachdeva told DW.

Negotiations on the FTA between India and the EU resumed in 2022, nearly a decade after initial attempts were suspended in 2013. In the past two years, there have been 13 rounds of talks with the 14th scheduled to take place in Brussels between October 6-10.

Strategic relationship between India and EU?

For India, clinching this FTA means tariff-free entry for key exports, reducing dependency on volatile US markets and enhancing its stature as Europe's primary Asian partner. 

And for the EU, sealing the deal diversifies supply chains, secures agricultural and tech trade and strengthens its geopolitical leverage in the Indo-Pacific.

Experts point out that the timing of the negotiations has raised the stakes, especially with India being hit by US protectionism and needing new, robust export pathways.

The US has imposed a 50% tariff on goods from India, which includes a 25% penalty for its continued purchases of Russian oil.

It is estimated that the current tariffs could affect roughly half of India's nearly $87 billion (€74.7 billion) worth of annual exports to the US.

"In the current phase, shifting global and Asian geopolitics, coupled with the weaponization of tariffs by the Trump administration, are pushing both towards greater compromises to finally seal the deal," Sachdeva said.

Anil Wadhwa, a former Indian diplomat, told DW that Trump's tariffs have created unpredictability and unreliability in the India-US trade partnership and has eroded trust, creating a chasm which will take a long time to fill.

"Indian labor-intensive industries also need an outlet in the long term as well as diversification to sustain jobs at the lower end. Besides, there is a lot to gain from the India-EU trade relationship. Investment flows and manufacturing are part of the package," Wadhwa said.

He points out that the EU is also looking to diversify and enter the Indian market due to its predictability, size, democratic similarities, rule of law and similar outlooks on data governance, artificial intelligence and data issues. 

Sense of urgency to seal the FTA deal

Ummu Salma Bava, chairperson and Jean Monnet Chair at the Centre for European Studies in Jawaharlal Nehru University, told DW that the visit by European Commission President Ursula von der Leyen in February underlined a sense of urgency.

Von der Leyen said in her speech then that it was time to take [India and the EU's] partnership "to the next level" for their security, prosperity and "the common global challenges that we face."

German Foreign Minister Johann Wadephul's visit this month gave further momentum to the talks, said Bava. She pointed to an unprecedented level of political engagement between the two sides — a clear sign to the shifting political pressures triggered by Washington under Trump.

Another delegation of the EU's Political and Security Committee (PSC) was also in India last week to discuss key foreign policy, security and defense-related matters in the lead up to the EU-India summit in 2026.

"Europe has been, and will remain, a key partner in India's ambitious modernization journey through trade, investment and technology," Sachdeva said.

"At the same time, India's large and expanding economy, with several globally competitive sectors, holds strong appeal for Europe," he added.

According to the European Commission, the EU is currently India's second-largest trading partner, with trade in goods worth €120 billion last year, or 11.5% of India's total trade. 

Sticking points for India and EU

However, negotiations between India and the EU "remain challenging," as they are "tough bargainers," according to Sachdeva.

The EU is seeking tariff reductions on vehicles, wine, spirits and dairy products, whereas India is focused on securing expanded market access for its textiles, pharmaceuticals, steel and petroleum products.

Former diplomat Wadhwa noted that one sticking point is the EU's Carbon Border Adjustment Mechanism (CBAM) — a new carbon tariff system that requires importers to pay for the carbon emissions generated in producing certain goods like steel, fertilizers, aluminium and electricity brought into the EU.

"Resolving market access, agricultural tariffs and CBAM is pivotal for unlocking greater trade volume, safeguarding Indian industry, and ensuring EU climate goals do not penalize Indian exporters unfairly," he said.

Bava told DW a breakthrough is expected in the auto sector, with European car manufacturers gaining more access to the Indian market while boosting Indian companies' access to European markets for automobile parts.

Mohan Kumar, a former Indian envoy to France, explained that both the EU and India are trying to mitigate the geopolitical risks arising from Trump's tariffs and transactional approach to foreign policy.

The US leader upped the ante again this month, telling the EU to impose 100% tariffs on India as well as China as part of Trump's so far unsuccessful attempts to pressure Russian President Vladimir Putin to end the war in Ukraine.

"There is strategic convergence between the two players to get the FTA done before the end of this year," Kumar said.

Edited by: Karl Sexton