Conclusion of talks on India-EU FTA set to be announced today; pact later this year

“After subsuming a few chapters, India and the EU have completed talks on 21 chapters. While the legal scrubbing of the deal would take four to five months, the trade deal will come into effect by early next year after being ratified by the European Parliament,” an official said.

The trade agreement is expected to be among the most comprehensive deals that India would sign, which could benefit India’s labour intensive sectors, ranging from marine products, textiles, footwear and sports goods. India is also likely to open its automobile and alcoholic beverage sectors, given the EU’s strong interest in the areas.

As the India-EU FTA is expected to come into force by next year, US tariffs could continue to hurt Indian exporters. Seeking immediate support from the government, the apparel exporters wrote to Vice President C P Radhakrishnan last week, citing worries of job losses on account of US tariffs.

European Commission President Ursula von der Leyen with Union MoS Jitin Prasada after she arrived in New Delhi on Saturday. (PTI)

The exporters said that market diversification is not a short-term option as textile sourcing is embedded in long-term buyer supply chains, and developing alternate markets requires “two-three years for buyer onboarding, compliance audits, and volume scaling”.

“Abrupt loss of the US market will lead to permanent customer displacement and allow competitor nations with preferential access to replace India,” Apparel Export Promotion Council (AEPC) said, while seeking interim protective measures for textile exports.

The India-EU talks had gathered urgency amid dramatic shifts in American trade policies that have forced trade partners globally to scout for newer markets. While India is facing steep 50 per cent tariffs, the EU continues to face the risk of higher US tariffs despite a trade deal with Washington due to its tech regulations and differences over Greenland.

A key driver of the trade deal has also been the shared challenge of China. Indian industry has been encountering pricing challenges, especially while trying to scale up the solar energy sector. The EU is concerned about China’s dominance in critical technologies, as China holds a leading global manufacturing position in several areas, exposing the EU to potential risks.