India, EU to continue talks on steel, auto, carbon tax issues under FTA negotiations

New Delhi: India and the European Union have agreed to continue discussions on issues pertaining to steel, auto, and carbon tax, as these areas carry higher sensitivities, under the proposed free trade agreement, the commerce ministry said on Wednesday. India has also pitched for ensuring redressal of both tariff and non-tariff barriers in the pact, besides creating transparent and predictable regulatory frameworks to boost bilateral trade, it said. These issues came up for discussions during the three-day visit of Commerce and Industry Minister Piyush Goyal to Brussels. He met EU Commissioner for Trade and Economic Security Maros Sefcovic and gave an impetus to the ongoing negotiations. The minister's official visit concluded on October 28. "They also agreed that issues related to steel, auto, CBAM (carbon border adjustment mechanism), and other EU regulations still require further discussion, as these issues have higher sensitivities," the ministry said.

The EU has announced regulations such as CBAM and EUDR (Deforestation Regulation) which have been strongly objected to by India. Under CBAM, Indian exports of steel, aluminium, and cement to the EU could face tariffs of 20-35 per cent. India's exports of products like coffee, leather hides and paperboard worth USD 1.3 billion annually to the European Union will get impacted due to the deforestation regulation adopted by the EU, a report by think tank GTRI has said. During the negotiations in Brussels, Goyal has emphasised on the need for preferential treatment for India's key asks, particularly those with respect to labour-intensive sectors. "Both sides agreed to work closely to finalise the non-sensitive industrial tariff lines," it said, adding there was also a good discussion on India's concerns on non-tariff measures and the new EU regulations. Both sides reaffirmed their shared commitment to conclude the negotiations for the proposed pact FTA by the end of 2025, it added. "India recognises the importance of ensuring that the FTA remains balanced in addressing both tariff and non-tariff barriers and creating transparent and predictable regulatory frameworks that accelerate trade for both partners in the coming years, it said. To advance the ongoing discussions, the EU technical team led by the Director General for Trade will visit India next week with the objective of achieving a constructive conclusion. Engagements between the two sides have increased as they have decided to conclude negotiations by December. Goyal's visit follows the conclusion of the 14th round of talks between the two sides from October 6-10. Commerce Secretary Rajesh Agrawal has also held talks with European Commission (EC) Director General for Trade (DG-Trade) Sabine Weyand in Brussels. In June 2022, India and the EU bloc resumed negotiations for a comprehensive FTA, an investment protection agreement and a pact on geographical indications after a gap of over eight years. It was stalled in 2013 due to differences on the level of opening up markets. India's bilateral trade in goods with the EU was USD 136.53 billion in 2024-25 (exports worth USD 75.85 billion and imports worth USD 60.68 billion), making it the largest trading partner for goods. The EU market accounts for about 17 per cent of India's total exports, and the bloc's exports to India constitute 9 per cent of its total overseas shipments.

Besides demanding significant duty cuts in automobiles and medical devices, the EU wants tax reduction in other products like wine, spirits, meat, poultry, and a strong intellectual property regime. Indian goods' exports to the EU, such as readymade garments, pharmaceuticals, steel, petroleum products, and electrical machinery, can become more competitive if the pact sails through. The India-EU trade pact negotiations cover 23 policy areas or chapters, including trade in goods, services, investment, trade remedies, rules of origin, customs and trade facilitation, competition, government procurement, dispute settlement, intellectual property rights, geographical indications, and sustainable development.