The EU–India talks test global trade rules.
After nearly two decades, the European Union (EU) and India are edging closer to finalizing a free trade agreement. Talks, first launched in 2007 and repeatedly stalled—due partly to the EU bloc’s ratification and bureaucratic lethargy, and partly to India’s reluctance towards EU-wide policies—are suddenly moving with purpose. Both sides want to conclude a deal by the end of 2025, a deadline that feels ambitious but not impossible.
The context is clear enough: India is under new pressure after Washington slapped tariffs on its steel and aluminum exports, while Brussels is eager to diversify trade partnerships in an era of supply chain shocks and geopolitical fragmentation. Together, the two markets represent more than a quarter of the world’s population and a combined GDP that rivals China’s. A deal would not just matter bilaterally; it would reshape the rules of global trade.
The obstacles are formidable. The first and most obvious is tariffs. The European Union wants India to slash its notoriously high import duties on cars, wines, spirits, and dairy products; sectors that carry both economic and cultural weight in Europe. India has long resisted, anxious about exposing its domestic industries to a flood of foreign competition. Given the recurring farmers’ protests against cheaper grain imports, it is easy to understand why politicians are anxious not to upset their voters further.
On the other side, Delhi wants easier access for its textiles, pharmaceuticals, and agricultural products. Brussels, however, is reluctant to give ground without reciprocal concessions. That tension between protecting sensitive sectors and expanding market access is the backbone of every trade negotiation, and here it is especially in focus. After the bruising that the EU received in the US–EU trade negotiations, it is understandable that they are cautious about future deals.
Then come the regulatory hurdles, the “soft” trade barriers. The EU’s standards for food safety, environmental compliance, and intellectual property are among the strictest in the world (a fact that has scuppered many EU–US trade talks in the past), and Indian exporters argue that meeting these benchmarks requires costly adjustments that tilt the playing field in Europe’s favor.
Services are another sticking point. India, which has built its contemporary global reputation and international economic strength on IT outsourcing and skilled labor mobility, wants recognition for qualifications and smoother pathways for professionals to immigrate to Europe. Yet the EU, wary of domestic political sensitivities over labor movement, is cautious about opening the door too wide.
The impasse is not merely economic but cultural: a matter of trust, control, and sovereignty. With an eye on the souring of Canada–India relations, and the controversy over the H-1B visa in the US, the EU is trying to protect its service-focused economies just as India is trying to shield its domestic manufacturing and agricultural base.
Environmental regulation is an even more contentious frontier. The EU’s Carbon Border Adjustment Mechanism, which levies imports from high-emission industries, is seen in Delhi as a disguised tariff that penalizes developing economies. India, still heavily reliant on coal and pursuing growth targets that demand vast energy consumption, argues that such rules ignore its lower per capita emissions and developmental stage. Given India’s high levels of CO2 emission, this could be deadly to their modernization.
Brussels, however, views carbon pricing and deforestation-free supply chains as non-negotiable pillars of its trade policy. With a Europe-wide program to decarbonize and increase green energy-supply, this is a real sticking point. Reconciling these positions will require either creative exemptions, phased implementation, or side deals that soften the blow for Indian exporters.
Symbolism also matters. Few issues illustrate this better than the battle over basmati rice. India has applied for exclusive geographical indication rights to the term “Basmati” in the European market. Pakistan, which also exports large volumes of the grain, insists it has equal claim. For the EU—which is no stranger to officially stamping certain food names like feta, gruyere, and champagne—granting India exclusivity risks embroiling the bloc in South Asian rivalries.
For India, however, this is not just about commercial advantage; it is about national pride. A compromise that preserves market access for Pakistan while recognizing India’s claim in some form may be the only way forward. In a negotiation where every concession is wrangled, even rice becomes geopolitical.
What India ultimately hopes to secure from the deal is clear. Diversification is top of the list: with the US imposing tariffs and China increasingly unpredictable, Delhi wants a stable anchor in Europe. Market access for labor-intensive industries is vital for job creation, while regulatory simplification would ease costs for exporters.
India also wants reassurance that EU environmental and consumer rules will not amount to protectionism dressed up as principle. And, not least, Delhi wants recognition of its geographical product indications, with basmati rice at the forefront. In short, India is seeking growth, security, and respect: the ability to play on equal terms with one of the world’s most rule-setting economic blocs.
At a time when global trade is fragmenting, the EU–India deal would stand as proof that two large, diverse economies can still find common ground.
For Europe, it is a chance to project influence in Asia without being pulled into the binary of US–China rivalry. For India, it offers a pathway to embed itself more deeply into global supply chains while defending its developmental priorities. For the world, it is a test case: can climate concerns, regulatory standards, and traditional trade barriers be reconciled in a way that allows both growth and sustainability?
If the agreement succeeds, it will create a template for future trade deals, showing how developing countries can integrate into a system often written by advanced economies without surrendering autonomy. If it fails, it will be another reminder of how difficult it remains to bridge the gap between protectionism and openness, sovereignty and cooperation.
Either way, the stakes are high. A deal between the EU and India is not just about tariffs on cars or labeling rights on rice. It is about whether the architecture of global trade can adapt to a multipolar, contested, and environmentally constrained world.
