As India and the European Union enter the tenth round of negotiations for the Broad-based Trade and Investment Agreement (BTIA), significant hurdles remain despite both sides aiming to finalise the deal by the end of 2025, according to a report by the Global Trade Research Initiative (GTRI). While a successful agreement could boost bilateral trade and expand market access, deep disagreements over tariffs, regulatory barriers, and investment protections continue to stall progress.
Negotiations, which have been ongoing since 2007, have faced multiple delays due to contentious issues such as agricultural tariffs, auto import duties, government procurement, and sustainability commitments. The EU is pushing for deep tariff cuts across sectors, particularly in automobiles, wines, and dairy, while India remains cautious about opening its market too widely. Indian negotiators are also resisting demands on sustainability and labour standards, fearing that rigid obligations could interfere with domestic policies.
A major sticking point is the EU’s demand for reduced tariffs on dairy and wine imports. The EU wants India to cut tariffs on cheese and skimmed milk powder, which India currently protects through high duties to safeguard its dairy industry. Similarly, European wine exporters are pressing for tariff reductions from the current 150 per cent to 30-40 per cent, a move that Indian wine producers strongly oppose. The report highlights that even if India agrees to lower tariffs, stringent EU regulatory standards could still act as trade barriers.
The automobile sector remains another contentious area. The EU seeks a reduction in India’s steep 100-125 per cent import duties on fully built cars, proposing a cut to 10-20 per cent. While this could make European luxury cars more affordable in India, domestic car manufacturers fear that lower duties will impact local production and employment. India has resisted such tariff cuts in past trade negotiations, and conceding to EU demands could create pressure to extend similar benefits to other trading partners like Japan and South Korea.
Trade in services is another point of disagreement. India is pushing for recognition under the EU’s General Data Protection Regulation (GDPR), which would ease cross-border data flows for Indian IT firms. However, the EU remains reluctant, insisting that India adopt stronger privacy regulations. Additionally, India is seeking easier business visa norms for professionals travelling to Europe, while the EU wants greater market access in India’s financial, legal, and banking services.
The report authored by Ajay Srivastava, Founder, GTRI also highlighted concerns over the EU’s Carbon Border Adjustment Mechanism (CBAM), which could impose tariffs of 20-35 per cent on Indian exports of steel, aluminium, and cement. India argues that while the EU seeks tariff-free access to the Indian market, CBAM and other environmental regulations could serve as indirect trade barriers, reducing the competitiveness of Indian goods in Europe.
Additionally, while India prefers its Model Bilateral Investment Treaty framework, the EU is demanding stronger investor rights, fearing that India’s policies could limit European companies’ ability to seek legal recourse. Past investor-state disputes have made India cautious about agreeing to broad investment protections, and negotiations remain difficult.
Despite these challenges, the GTRI report revealed the potential benefits of a successful agreement. Bilateral trade between India and the EU exceeded USD 190 billion in FY 2024, and a well-structured deal could further enhance economic ties. The EU remains India’s second-largest export destination, with major exports including petroleum products, textiles, pharmaceuticals, and IT services. In turn, the EU is a key supplier of machinery, automobiles, aircraft, and chemicals to India.
While both sides have expressed renewed political will to conclude the BTIA, the road ahead remains uncertain. With unresolved issues across tariffs, sustainability, investment, and market access, the negotiations will require significant compromises. If an agreement is reached, it could mark a major shift in India-EU trade relations, but if talks stall again, the deal risks being pushed further into the future.
