A free trade agreement (FTA) between India and the European Union (EU) is set to be formally announced at the 16th India–EU Summit on Tuesday, even as trade tensions between New Delhi and Washington remain elevated.
Describing the deal as “balanced and forward-looking”, Commerce Secretary Rajesh Agrawal said it is expected to boost trade and investment between the two sides and is likely to come into force sometime next year.
While the United States has not officially responded to the India–EU agreement, US Treasury Secretary Scott Bessent was critical of the deal as he told ABC News that it could indirectly help finance Russia amid the nearly four-year-old Russia–Ukraine war. However, experts believe the agreement could play a key role in nudging Washington back to the negotiating table.
“As far as the budget is concerned, the EU trade deal is expected to happen tomorrow. I think this will be a significant step in bringing America to the negotiating table if India secures a very good deal with the EU,” said Raymond Group Managing Director Gautam Singhania.
He pointed out that the FTA—particularly negotiations around zero-duty access for textiles—could deliver a major boost to employment and industrial growth.
“Textiles remain among the largest employers in the country, and duty-free access to the EU market would benefit not only the sector but the broader economy as well,” Singhania added.
India’s textile sector was severely impacted after US President Donald Trump imposed a 50 per cent tariff on Indian goods last year, including a 20 per cent punitive duty linked to India’s continued purchase of subsidised Russian oil.
Foreign affairs expert Robinder Sachdev said the EU is facing growing challenges amid strained relations with the United States.
“US-European relations were heading towards a drift. This past week, I think, has dealt a trauma to the Europeans and European leadership. Now, the EU-India free trade agreement is a big step forward,” he told ANI.
He added that recent developments, including discussions at the Davos meetings and renewed tensions with Washington, have prompted EU leaders to view India “with a fresh pair of eyes.”
Deloitte India partner Gulzar Didwania said the agreement could significantly scale up bilateral trade volumes over the coming years, with substantial export gains for India. He also stressed the importance of timing, as India’s trade talks with the US remain unresolved.
“India is already in discussions with the United States, but the tariff rates are yet to be finalised and negotiations are dragging on due to various reasons,” he said.
India and the EU have concluded official-level negotiations on the proposed FTA, which is expected to strengthen economic ties and boost two-way commerce.
“Official-level negotiations have been concluded, and both sides are set to announce the successful conclusion of FTA talks on January 27, Tuesday,” Commerce Secretary Rajesh Agrawal said on Monday.