Explained - Is the India-EU Trade Deal Done and When Will It Come Into Effect?

India

and the European Union haveformally concluded negotiations on their long-pending Free Trade Agreement, marking a major milestone in bilateral economic relations. The announcement, made by commerce secretary Rajesh Agrawal on Monday, comes on the sidelines of high-level diplomatic engagements during the EU leadership’s visit to New Delhi for India’s 77th Republic Day and the 16th India-EU Summit. While the deal will be officially announced on January 27, the negotiations themselves are now complete, setting the stage for one of the world’s largest trade partnerships.Also Read | At Kartavya Path, A Signal To Washington: Reading EU Chief Ursula von der Leyen's Republic Day Visit

What has been finalised and what happens next

According to Agrawal, the negotiations have been successfully wrapped up and the text of the agreement has been finalised. “Negotiations have been successfully concluded. The deal has been finalised. It will propel trade and investments in both economies,” he said. Calling the agreement “balanced and forward-looking,” Agrawal added that it would help improve India’s economic integration with the EU.However, the agreement will not come into force immediately. Agrawal clarified that the legal scrubbing of the text will take about five to six months. This process involves lawyers from both sides reviewing the document to ensure consistency across languages and legal frameworks. “The deal will come into force sometime next year. Legal scrubbing of the text will take 5-6 months; formal signing will be done post that,” he said.Also Read |‘Financing War Against Themselves’: As India, EU Seal Trade Pact, US Hits Out at Europe Over Oil From New DelhiOnce the legal process is completed, the agreement will be formally signed and will then require ratification through the respective domestic procedures of India and the EU.

Why the deal was fast-tracked

The push to conclude the agreement gathered momentum after Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed last year to fast-track negotiations. Talks between India and the EU had been relaunched in 2022 after a nine-year pause, but global trade disruptions and geopolitical shifts added urgency to the process.Also Read | Is Trump Set to Roll Back 25% Tariffs on India? US Treasury Chief Drops HintThe negotiations also accelerated after US President Donald Trump imposed import tariffs on several trading partners, prompting both India and the EU to diversify trade relationships. An India-US trade deal has since remained unresolved, making the EU partnership strategically important for New Delhi.During the final stages, both sides were engaged in intense negotiations over sensitive sectors. According to Reuters, the EU pushed for sharp cuts in India’s import duties on cars, which currently exceed 100 percent. India, meanwhile, sought relief from EU trade curbs on its steel exports. Reuters reported that India was planning to slash tariffs on cars imported from the EU to 40 percent from levels as high as 110 percent as part of the agreement. At the same time, some sensitive farm and dairy products were kept out of the deal, with New Delhi stressing the need to protect farmers.

What the EU says about the scale of the agreement

European Union Trade Commissioner Marcos Sefcovic described the agreement as potentially transformative. In an interview with Euro News ahead of the summit, he referred to it as the “mother of all deals,” echoing Ursula von der Leyen’s words. He said negotiators were “checking their final numbers” as the EU seeks reductions in India’s steep import duties, which can go up to 150 percent in certain sectors.Also Read | Why The EU Trade Deal Has India’s Auto Stocks On EdgeSefcovic noted that the agreement would create a free trade area covering nearly 2 billion people and significantly open the Indian market to European companies, while excluding sensitive sectors to ensure a “positive outcome.” “This is the largest trade deal ever,” he said, highlighting that around 6,000 European firms already operate in India and that bilateral trade has grown sharply over the past decade.Brussels views the pact as a strategic move to diversify trade away from over-dependence on the United States and China. Indian officials, for their part, have signalled openness to foreign investment and imports in key sectors.(With Inputs from PTI, ANI, Reuters)