India and the European Union are moving closer to concluding a long-awaited free trade agreement, as negotiators narrow differences on key sticking points, especially market access for automobiles. EU Trade Commissioner Maros Sefcovic said discussions have entered their final phase, with both sides working to strike a balance between India’s need to safeguard its rapidly expanding domestic car industry and Europe’s demand for greater access for its automakers.
Speaking to CNBC-TV18, Sefcovic indicated that a combination of quotas, phased tariff reductions and transition periods is emerging as a viable framework for the auto sector — historically one of the most challenging areas in the negotiations. While European carmakers have pushed for lower import duties and clearer regulatory pathways, India has remained cautious about exposing local manufacturers to abrupt competition.
Acknowledging structural differences between the two markets, Sefcovic noted that while Europe’s automobile sector is mature, India’s is still growing at a fast pace. He emphasised that the EU recognises New Delhi’s priority of ensuring long-term growth for its domestic automotive industry.
Describing the proposed agreement as a “mega deal”, Sefcovic said it could become the EU’s largest trade pact by market size, covering nearly two billion consumers. Both sides are targeting an announcement at the India–EU summit in New Delhi on January 27, even as technical details continue to be finalised.
Progress has also been reported in areas such as wines and spirits, while sensitive sectors including agriculture and dairy are being handled carefully to avoid crossing political red lines. Negotiators are pursuing an ambitious agenda, aiming for partial or full tariff liberalisation on up to 99 per cent of traded goods.
The EU estimates the agreement could deliver annual tariff savings of around €4 billion and potentially double bilateral trade within five years.
Ahead of the summit, Sefcovic held his tenth in-person meeting in a year with Commerce and Industry Minister Piyush Goyal, underlining the intensity of engagement between the two sides. Both leaders reiterated their commitment to reaching a mutually beneficial and strategic agreement. The talks coincide with a high-profile visit by the EU’s top leadership to India, led by European Commission President Ursula von der Leyen and European Council President António Costa.
