Shishir Priyadarshi
The hardest sticking points are well-known. On the EU side, automobiles top the list. Without meaningful tariff or volume concessions on the mid- and high-end segments, European manufacturers find it hard to justify fresh investment in Indian assembly and production.
The EU also wants stronger protection for investors – predictable tax policies, transparent dispute resolution, and treatment on par with domestic players. India’s newer model Bilateral Investment Treaties (BITs), cautious after past arbitration cases, need strengthening to meet those expectations.
Then comes sustainability. Brussels wants India to align with its evolving green trade architecture – be it the Carbon Border Adjustment Mechanism (CBAM), supply chain due diligence standards, or corporate sustainability disclosures (CSRD). India’s negotiators rightly seek flexibility and time-bound transitions, but there’s no escaping that the green frontier is now the new tariff wall.
Real sensibilities
From India’s side, the sensitivities are equally real. Tariffs on automobiles and spirits are politically sensitive and deeply entrenched. Yet industry leaders now recognise that phased, calibrated concessions are essential if India wants reciprocal access to Europe’s markets for textiles, pharmaceuticals, and engineering goods.
Quality control and regulatory predictability are another pain point. The proliferation of Quality Control Orders (QCOs) – originally designed to limit low-quality Chinese imports – has swept in European exporters too, creating uncertainty. Some rollback is already under discussion, but alignment on standards, testing, and certification remains a must. Without mutual recognition of laboratories and certifiers, even compliant firms face costly delays.
The same applies to data and digital trade. Without EU recognition of India as “data secure,” high-end collaborations in AI, robotics, and advanced manufacturing remain out of reach. For the world’s most dynamic digital economy, that’s an opportunity cost India can ill afford.
Changing mindset
For decades, Indian business saw trade agreements as sources of threat rather than opportunity. That mindset is changing. Today, key sectors – auto components, engineering goods, chemicals, and electronics – see Europe as a stable, high-value partner. They believe Indian firms can meet European standards with adequate transition time and capacity-building.
India already supplies advanced driver assistance systems and high-safety components to Daimler, Volvo, and other EU companies. These partnerships show that Indian industry can match global technical standards when the policy framework is predictable and stable.
What industry wants now are three things: clarity on future regulations, MFN-equivalent treatment to ensure no discrimination after signing, and a credible, transparent process for future rule changes.
For both sides, small issues now risk holding big ambitions hostage. India’s leadership understands that finishing this FTA will require coordinated political management across ministries – from Finance on taxation and investment treaty matters, to the Quality Council of India on standards and lab accreditation.
Keeping the focus
For Europe, the task is to avoid overreach. The perfect should not become the enemy of the good. Overloading the agreement with non-trade conditionalities will make it politically unsellable in Delhi and practically unenforceable on the ground.
Both sides should keep the focus where it belongs: market access, investment confidence, and regulatory trust.
An India-EU FTA is far more than a trade negotiation – it’s a test of whether two large democracies can craft a pragmatic partnership in a polarising world.
If clinched, it would send a powerful signal: that open economies still have agency amidst protectionist headwinds, that rule-based trade can still be built on trust and mutual benefit.
The window is narrow, the politics complex – but history rewards those who move with purpose. For India and Europe, this is that moment.
Now is the time to close the deal.
