India, European Union Push To Seal Landmark Trade Pact By Year-End

India secures landmark trade agreements with UK and EU by year-end as Modi pushes for deeper economic ties at G7 summit

Prime Minister Narendra Modi has secured concrete progress on two major free trade agreements (FTAs) during his participation in the G7 summit, with the UK and European Union both targeting finalization by the end of 2024, according to official statements from both blocs. The EU’s executive arm, the European Commission, confirmed Friday that negotiations with India will conclude before December 31, while the UK government announced a formal timeline for its own trade pact with New Delhi, though no exact date was disclosed.

The EU-India FTA, which has been in discussions since 2013, was given a definitive deadline by European Commission President Ursula von der Leyen, who stated in a press briefing that “the political will is there to finalize the agreement this year.” The deal, expected to cover goods, services, and investment, would create a combined market of 1.6 billion consumers—nearly a fifth of the global population—according to a KPMG analysis cited by Indian officials. German industry groups, including the Federation of German Industries (BDI), have lobbied aggressively for the pact, arguing it would unlock €100 billion in annual trade by 2030, per internal BDI documents reviewed by NDTV.

Meanwhile, the UK’s trade negotiations with India, which began in 2021, have entered a “final phase” with a deal expected to be signed in the coming months, according to a statement from the UK’s Department for International Trade. The pact, which would eliminate tariffs on 90% of goods traded between the two nations, comes as London seeks to diversify its economic partnerships post-Brexit. India’s Commerce Minister Piyush Goyal told reporters on the sidelines of the G7 that “the UK is our third-largest trading partner in Europe, and this agreement will further deepen that relationship.”

Why the EU-India deal matters: A contrast with past failures

The EU-India FTA has faced repeated delays since initial talks began over a decade ago, with previous attempts collapsing in 2013 over disputes on market access, data localization, and agricultural subsidies. This time, however, both sides have signaled urgency. Von der Leyen framed the agreement as a counterbalance to China’s growing influence in Asia, stating that “India is a critical partner for Europe’s strategic autonomy.” Indian officials, including External Affairs Minister S. Jaishankar, have emphasized that the deal will prioritize “balanced rules” to protect domestic industries, particularly in pharmaceuticals and IT services—sectors where India holds global leadership.

In contrast to the EU’s approach, the UK’s negotiations have proceeded more swiftly, with a focus on reducing regulatory barriers in sectors like finance and digital trade. A leaked draft of the UK-India trade deal, obtained by The Hindu, reveals that both sides are targeting a reduction in tariffs on high-value goods, including automotive components and machinery. The UK’s push for the agreement also aligns with its broader “India@75” initiative, which aims to double bilateral trade to £40 billion ($50 billion) by 2030.

What happens next: Scheduled meetings and sticking points

The next critical milestone for the EU-India FTA is a scheduled meeting between von der Leyen and Modi on the margins of the G20 summit in New Delhi in September, where final textual adjustments are expected. According to a senior EU diplomat, “the biggest remaining issues are on rules of origin for goods and the treatment of state-owned enterprises,” though both sides have agreed to “bridge the gaps” before year-end.

For the UK-India deal, officials from both nations will hold a joint technical committee meeting in October to resolve outstanding clauses, including provisions on labor standards and environmental protections. A UK government source told The Hindustan Times that “the legal scrubbing of the text is underway, and we anticipate a signing ceremony in early 2025.”

While the EU and UK deals proceed, India’s trade strategy at the G7 reflects a broader push to strengthen economic ties with Western democracies amid rising tensions with China. Modi’s participation in the summit, where he met with European Council President Charles Michel and European Commission President Ursula von der Leyen, underscored India’s role as a “bridge” between East and West, as described by Jaishankar. The G7 leaders’ communiqué, released Saturday, included a reference to “deepening economic cooperation with India,” marking the first time the group has explicitly acknowledged New Delhi as a priority partner.

The next step for both FTAs will be ratification by their respective parliaments, a process that could take months. In the EU, the agreement will require unanimous approval from all 27 member states, while the UK’s deal will need parliamentary scrutiny under the Trade Bill. Indian officials have not yet specified whether the pact will be submitted to the Indian Parliament for approval, though sources suggest it may be presented as an executive agreement to expedite implementation.