German Chancellor Friedrich Merz suggested on Monday that the European Union and India could finalize a landmark free trade agreement by the end of January. Speaking in Ahmedabad after meeting Prime Minister Narendra Modi, Merz emphasized that top EU leaders would travel to India to seal the deal if negotiations conclude on time.
Merz described the talks as a “major step forward” for strengthening economic ties between the EU and India, which had bilateral trade of 120 billion euros ($140.21 billion) in 2024, making the bloc India’s largest trading partner.
Negotiation Priorities and Challenges
The EU is pushing for significant tariff cuts on cars, medical devices, wine, spirits, and meat, as well as stronger intellectual property protections. India seeks duty-free access for labour-intensive goods and faster recognition for its growing autos and electronics sectors.
Despite progress, disagreements remain over steel, carbon levies, and market access, requiring further compromise, according to an Indian official familiar with the talks.
Broader Strategic Context
The potential deal comes as U.S.-India trade talks have stalled and after the EU’s recent Mercosur agreement, highlighting Europe’s effort to diversify trade networks. Germany is also urging India to reduce reliance on Russian energy and military imports, while recognizing the complexities of India’s current ties with Moscow.
Merz noted the world is experiencing a “renaissance of unfortunate protectionism,” citing tariffs and export controls from the U.S., China, and other nations that have disrupted global supply chains, particularly affecting German manufacturers.
Agreements Signed During Visit
During his visit, Merz and Modi signed agreements on minerals, healthcare, and artificial intelligence, signaling progress even as broader trade issues remain under negotiation. German officials described the discussions as “very intensive,” raising hopes for a breakthrough in the EU-India free trade talks.
