India eyes broad-based investments from EU, access to legal & accounting services; convergence on automobile, alcoholic beverages pending

“While no additional chapter was closed in the last round of discussions, substantial progress was made in several chapters, including the goods. More discussions are required in the automobile, beverage sectors, and finer aspects related to services, and non-tariff measures need to be discussed. Both sides have their list of non-tariff barriers that are being worked on,” the official said.

Access to the Indian automobile and alcoholic beverage sectors is one of the top demands for the European Union. After India opened both these sectors that have traditionally seen high protection for the UK, the EU will likely seek more ambitious opening as they compete with the UK in similar product categories. India and the UK signed a trade deal earlier this year, giving limited quota access to the UK’s automobiles and whiskey.

The official said that India is working to reduce the compliance cost for the industry in the EU market. “For instance, in fisheries, every second consignment is subjected to examination, which will add cost for India. If the quantum of examination is high in any area, that means additional cost for us. So compliance costs due to regulations in several sectors such as agriculture, industrial and fisheries,” the official said.

“India is also seeking to improve Indian pharma exports to the EU. Currently, it takes a long time for the EU to approve Indian pharma products. Besides, the EU’s Maximum Residue Limits (MRLs) for agricultural products are a worry for countries globally. We need to align with it. India has studied the EU’s deal with Mercosur to understand the EU’s position and get some reference points.

‘High tariffs in India are a barrier’

The European Commission, in a report to the European Parliament on Wednesday, said that the EU is India’s largest trading partner and India is the EU’s largest trade partner in the Global South. In 2024, bilateral trade in goods reached €120 billion — an increase of nearly 90 per cent over the past decade and around 6,000 European companies operate in India.

“Despite this progress, significant untapped potential remains. India accounts for less than 2.5 per cent of the EU’s trade in goods and services, and Indian investment in the EU totals only Euro 10 billion. Key barriers in India include high tariffs and internal measures that restrict import competition, limit foreign direct investment, and constrain business opportunities on both sides,” the report said.

The report said that the EU is committed to scaling up investments in India through ‘Global Gateway’, by de-risking private-sector investment with guarantees and blended finance. Global Gateway is the European Union’s strategy to boost smart, clean and secure connections in digital, energy and transport sectors, and to strengthen health, education and research systems across the world. The Team Europe Global Gateway investment portfolio in India already exceeds Euro 15 billion, spanning sectors such as renewable energy, water, urban transport and digital infrastructure. “Future projects could expand into other strategic sectors to support India’s modernisation, green and digital transitions, and strategic value chains, as well as to promote connectivity in the region. The European Investment Bank (EIB) will remain a key player in advancing this agenda,” the report said.

The EU and India should also jointly assess external vulnerabilities and strategic trade opportunities to identify other priority sectors, the report said. “A secure supply of critical raw materials remains a strategic priority for sustainable and resilient industrial ecosystems. India’s endorsement of the G7 Critical Minerals Action Plan reflects alignment on key principles, including sustainability, diversification, and market transparency, and provides a basis for practical cooperation,” the report said.