The prospect of a comprehensive Free Trade Agreement (FTA) between India and the European Union (EU) is once again in the spotlight, stirring both excitement and skepticism. While the forces of global geopolitics and economic necessity seem to be nudging the two sides closer, history reminds us that optimism must be tempered with caution. Over the past two decades, India and the EU have flirted with the idea of a bilateral FTA repeatedly, yet each attempt has stalled, usually due to “a gap in ambition.” The end-of-2025 target for a formal deal is ambitious, but not entirely unrealistic.

To grasp the significance of the potential FTA, it is worth revisiting the economic gravity of the EU in India’s trade calculus. A common misconception persists among many Indians that either the United States or China holds the title of India’s largest trading partner. In reality, it is the EU a 27-nation bloc whose combined trade with India surpasses that with either superpower. Yet, paradoxically, the EU’s soft power in India remains muted, a reflection of its cautious and bureaucratic approach to international engagement.

India’s ties with Europe are ancient, extending over two millennia. From the Roman appetite for Indian silk to contemporary trade in machinery, chemicals, and digital services, the subcontinent has long been a vital partner. Today, India and the EU are not only major economies but also two of the largest democracies, sharing values of pluralism, multi-tiered governance, and economic diversity. While India has transitioned from being a primary recipient of EU development aid to a trade and investment partner, the trajectory of bilateral economic engagement has steadily grown. In 2024, merchandise trade between India and the EU reached $129.4 billion, surpassing trade with both the United States and China. Services trade also continues to flourish, particularly in IT, software, and professional services, solidifying India’s positive trade balance with Europe.

However, the devil lies in the details. The EU’s bureaucratic machinery and India’s regulatory complexities have historically slowed negotiations. Disagreements remain over agriculture, dairy, wines, automobiles, services, and environmental measures such as the Carbon Border Adjustment Mechanism (CBAM), which India views as protectionist. Likewise, mutual recognition of qualifications, data security standards, and easier market access for services are pressing Indian priorities. The challenge is to find a compromise that balances the EU’s protective instincts with India’s growth aspirations.

Yet, there is cause for cautious optimism. The “planets” may indeed be aligning this time. The EU’s anaemic growth, geopolitical recalibrations due to the Russia-Ukraine war, and concerns over China’s restrictions have created a strategic incentive to deepen economic engagement with India. Similarly, India’s pursuit of alternative markets following trade constraints in the United States and the loss of preferential access under the EU’s GSP adds urgency to the negotiations. The mutual benefits are clear: for India, higher exports, technology transfers, and investment inflows; for the EU, access to India’s booming market and talent pool.

Still, achieving an FTA by the end of 2025 will require a rare combination of political will, flexibility, and pragmatism on both sides. From the EU perspective, ratification by the European Parliament and approval by all 27 member states is a complex process, potentially stretching over months or even years. On the Indian side, legal, regulatory, and administrative frameworks must be harmonized. If successful, however, this FTA could become one of the largest and most consequential agreements in recent history, unlocking untapped potential for bilateral economic synergy and signaling India’s emergence as a central pillar in the EU’s strategic and economic calculus.

In conclusion, the India-EU FTA is more than a trade agreement; it is a litmus test for strategic patience, negotiation acumen, and economic foresight. The long tunnel of bilateral talks may finally have a light at the end, but both sides must tread carefully, lest past ambitions remain unfulfilled. For India and the EU alike, the prize is worth the painstaking journey an economic and strategic partnership for the 21st century.