Welcome to yet another edition, chief!

In today’s edition — A delayed trade deal between India and the US has had negotiators from both sides sweating it out. While that process drags on, India has had a whiff of success as it gets ready to sign a free trade agreement with the EU next week. We bring you a simple comparison of India’s trade volume with the US and the EU to put the scale of this FTA in perspective.

Where EU, US Stand in India’s Trade

Vishwas Ved

Those getting restless about the India-US trade deal not coming through even nearly a year after the talks began could use a reminder that all trade deals move as per their own odometer. 

Take India’s negotiations with the European Union (EU). After nearly two decades of stop and start, the two sides are finally getting close to concluding a Free Trade Agreement (FTA).

The talks started in 2007 but were cold-storaged in 2013 when both sides couldn’t agree on how much each was willing to open up. 

For more than a decade, there was radio silence and neither side showed the willingness to revive it.

In June 2022, both sides decided to sit across from each other once again, with a clear plan to be ready with a deal by the end of the following year. So much for the plan.

Now, though, the talks seem finally poised to deliver results, landing at a moment when India’s parleys with the United States have lost momentum.

Trade Size Comparison

For nearly a year, the Indian media have been focusing on the elusive trade deal with the US, especially after the punitive tariffs imposed by Donald Trump.

All this while, India-EU negotiation, now dubbed as “mother of all deals” by Commerce Minister Piyush Goyal and EU Commission president Ursula von der Leyen, was taking place behind closed doors without much media glare.

The numbers make the point on their own. 

India-EU merchandise trade crossed €120 billion (around $130 billion) in 2024, as per official European figures. That is why an FTA with Europe carries far more weight for India than many realise.

India-US goods trade, by comparison, stood at about $128.9 billion last year, as per the US Trade Representative.

The number gets bigger when exports of services are also included.

European Commission figures put services trade at €59.7 billion (around $65 billion) in 2023, taking total economic ties to roughly €180 billion (about $195 billion). 

The picture looks different with the United States, where services account for a much bigger share. US figures show India-US services trade at $83.4 billion in 2024, pushing total goods and services trade to $212.3 billion.

Leveling the Tariff Field

According to reports, an FTA with the EU could give Indian exporters access to wealthy markets where demand is steady year after year.

Apart from that, exporters from sectors such as textiles, pharma, leather goods, chemicals, and engineering products will benefit because they are now going to face the same preferential tariffs as their competitors from other countries with a deal.

On the services side, Indian IT and business service firms already have a solid base across Europe, handling everything from tech support to professional consulting. 

Tourism and business travel from Europe also count toward the services trade, and that side of the relationship has been growing steadily over the years.

India’s Cautiousness

In trade negotiations, India has always made it clear that some sectors such as agriculture and dairy are off limits because millions of households depend on them to make a living.

On automobiles as well, India imposes high duties on fully built cars to safeguard its domestic manufacturing. 

Given all this, the eventual deal will probably aim for gradual and selective openings rather than a full-blown liberalisation. 

For Europe, though, the appeal of the Indian market is obvious because it’s big and expanding fast. 

For European firms selling everything from machinery and transport gear to fine wines, India’s steep import tariffs have been a nagging barrier. 

A few percentage points off those rates could go a long way in improving access and competitiveness.

Final Words

As India prepares to host Ursula von der Leyen and European Council President Antonio Costa for its 77th Republic Day celebrations and the 16th India–EU Summit on January 27, the stage is set for what could become one of the most consequential trade agreements of this decade.

European companies are already some of the largest investors in India, and Indian firms have been doing business across Europe. 

If anything, the trade deal would bring more predictability and smoother long-term planning.

The contrast with the United States is unmissable. India-US trade is actually larger once you add up everything, but it’s all happening without a proper trade agreement. 

With a proper trade agreement and tariff reduction, the India-EU trade volume, which currently stands at $195 billion, could see a significant upside.

If the EU deal is as big a mother as it is claimed it to be, Indian exporters could be looking at brighter days ahead..

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