The EU doesn’t want to be left out after its erstwhile member, the United Kingdom successful concluded India-UK free trade negotiations on May 6 and the bilateral trade talks between the United States and India are at an advanced stage, they said requesting anonymity.

Out of about two-dozen chapters—such as trade in goods and services, investments, government procurement, mobility for professionals, and intellectual property — India and the EU have already finalised at least three to four chapters, they said. Other proposed chapters include sanitary and phytosanitary measures, technical barriers to trade (TBT), trade remedies, rules of origin (ROO), customs and trade facilitation, competition, trade defence, dispute settlement, geographical indications, and sustainable development.

“There is a possibility to conclude the proposed FTA between India and the EU in two phases — early harvest with low-hanging fruits and a comprehensive agreement later because of two reasons. First, the nature and scope of the FTA are vast that involve building consensus among 27 EU members. And second, the rapidly evolving uncertain global trade dynamics,” one of the people said.

Both partners (India and the EU) understand that they must first focus on core trade matters and leave negotiations involving non-core issues for later. India adopted a similar approach with Australia when the two countries concluded an FTA in 2022. Its negotiations for a bilateral trade agreement (BTA) with the US is also on similar lines.

Hindustan Times on April 28 reported that the India-EU free trade talks had gathered pace with both partners starting sector-specific negotiations for the first time after narrowing chapter-wise differences, but that disagreements over non-core issues such as sustainability persisted.

After significant achievements have been made on core chapters related to market access, the two sides initiated sector-specific discussions, starting with the automotive and medical devices industries, that report added.

The talks were fast-tracked after the meeting between leaders of both sides in New Delhi on February 28. Trade matters have now gained precedence in negotiations over vexed non-trade issues such as sustainability, carbon tax and deforestation regulations, the people mentioned above said. They were referring to European Union president Ursula von der Leyen and Prime Minister Narendra Modi’s meeting during the college of commissioners’ India visit in February this year.

According to the people mentioned above, the EU’s insistence on including non-trade matters is the reason that a deal could not be agreed upon for the last 18 years. The FTA negotiations between the two partners were first launched in 2007 and then suspended in 2013 due to “a gap in ambition”. The talks resumed in 2022 after the India-EU leaders’ meeting in May 2021.