While US tariffs have hogged headlines, the end of 2025 deadline for India-EU Broad-based Trade and Investment Agreement (BTIA) looms large. India has consistently sought a “balanced and mutually beneficial” FTA. That balance is key. Potential headlines such as “EU reduces tariffs on 99 per cent of goods, India on 94 per cent” hide the fact that nearly 80 per cent of Indian exports to the EU even now face miniscule tariffs below 1 per cent. The only sector with genuine scope for gains is textiles, now under pressure from US tariffs. Agri-goods look less promising since EU tariffs are complicated, and access based on shifting standards.
Since talks resumed, the EU has added several new chapters on non-trade areas such as state-owned enterprises, energy, transparency, sustainable food systems, and anti-corruption. These go far beyond the single “Trade and Sustainable Development” chapter that existed before 2013. India has resisted these demands.
A Chief Trade Enforcement Officer has been recently appointed in Brussels to monitor compliance. India has no comparable structure, creating an inevitable asymmetry.
The EU is increasingly aggressive in enforcing its FTAs. It now pressures partners on issues ranging from coal use to alcohol taxes and labour laws. Countries such as Japan, South Korea, Vietnam and Canada have been forced to amend domestic laws and ratify ILO conventions because of EU demands.
Crafting a balance
Since the BTIA will tilt towards the EU both in market access and in non-trade commitments, India requires balancing provisions to find compelling value in the BTIA. Some possible asks in non-trade issues are:
Investment-linked trade access: EU investment in green sectors under India’s Paris Agreement commitments should be tied to tariff concessions. Real climate finance has been missing, while EU companies spend crores on doubtful carbon credits claiming green action. Such commitments will enable to act as the climate leader in deed.
Regulatory carve-outs: India’s exports must be shielded from excessive EU environmental rules such as the Carbon Border Adjustment Mechanism (CBAM), the Deforestation Regulation, and the Corporate Sustainability Due Diligence Directive. These rules are already straining EU industry, especially SMEs, and risk pushing production outside Europe. The EU has carved out exemptions for the US. Granting exemptions to the biggest polluter on the one hand, and pushing developing country imports to submit to one-sided regulatory burdens, will prove a dampener on whatever little tariff advantage is gained through the BTIA
Equal say in rule changes: India should be consulted whenever EU regulations affecting its exports are amended. Brussels is keen on influencing public policy of its partner countries through its market-muscle. Consultations built into the FTA would obviate the constant tussle with each relevant partner. For instance, CBAM challenged formally and informally; EUDR challenged formally and so on.
Safeguards in dispute settlement: Any attempt by the EU to raise non-trade issues which are outside the DS (Dispute Settlement) chapter should allow India to reverse trade concessions. While EU avers one thing in the texts, it begins consultations/disputes on areas that were never meant for being disputed. Korea was quite surprised with the auto dispute based on labour rights. Vietnam would have to lower taxes on alcohol, or that it would have to change its labour laws so fundamentally pursuant to the FTA.
Such guardrails would prevent EU’s non-state actors from misusing FTA texts with innovative interpretations and increase trust in EU.
Health emergencies: EU must agree to TRIPS waivers for medicines and vaccines in crises, necessary for the health of populations of the entire global south. The commitment should entail an automatic TRIPS waiver for related pharmaceutical products from EU companies once a pandemic has been declared by the WHO.
Consumption cuts: The EU should commit to per capita consumption cuts in line with India’s LiFE principles, for fundamental climate action. EU’s per capita consumption is way above global averages. Social cost of carbon in $220 per tonne of carbon US Environmental Protection Agency.
Climate finance: EU promises on climate finance must be implemented and be subject to review. In 2023 EU applied only €0.1 billion of its ETS (Emissions Trading System) €46.7 billion revenues on international finance. If tied to trade and market access, EU will have to prioritise its climate finance promises. That will help EU stand true to its promises and in its bid to be seen as the chief global actor in the arena of climate change. Investment in India will give much better returns in terms of emissions reduction.
A narrowing window
The BTIA has been under negotiation for nearly 20 years. India has moved forward, while the EU has lost ground both in India’s market and in its own manufacturing strength. The imbalance is stark: India gives the EU a growing market, while EU’s own growth is under question.
By constantly expanding the non-trade agenda and dragging talks for almost two decades, the EU has lost valuable market share in India. In 2010, its share of India’s imports was almost 12 per cent. By 2025 it had dropped to just over 8 per cent, while China’s rose sharply to over 15 per cent. At the same time, India’s own manufacturing has strengthened, while Europe’s reliance on China has only grown.
If EU industry and policymakers continue to chase regulatory overreach, they may miss out altogether. For Europe, the smartest move now is to recognise how much the ground has shifted, accept a fair deal, and conclude the agreement with the world’s fastest-growing economy.
The writer is former IRS and trade negotiator. She researches and teaches the intersection of environment and trade governance
Published on October 14, 2025
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