India and EU Poised to Sign Landmark Trade Agreement This Month, Agriculture Excluded

Based on verified briefings from European officials and my experience covering international trade negotiations, India and the European Union are expected to conclude a landmark free trade agreement later this month—one that deliberately keeps Agriculture outside its scope. The proposed pact comes at a critical moment, as both sides seek to recalibrate economic partnerships amid rising global trade tensions and ongoing shifts in international supply chains.

Against a backdrop of geopolitical uncertainty and supply chain realignments, the agreement is expected to deepen India–EU economic ties, reduce tariffs on select goods, and help Indian exporters diversify into new global markets.

European Commission President Ursula von der Leyen told members of the European Parliament this week that India is preparing to sign what she described as a historic free trade agreement with the European Union later this month. Notably, the deal has been structured to exclude agriculture, a sector that has long posed political and economic sensitivities in negotiations with New Delhi.

Speaking during a closed-door meeting with European lawmakers on Wednesday, von der Leyen confirmed that the agreement would be finalized “without agriculture,” calling the exclusion a strategic success rather than a compromise. According to her, navigating this politically delicate issue was essential to moving the negotiations forward.

Von der Leyen emphasized that the exclusion of agriculture was never in doubt. “It was clear from the very beginning that agriculture would not be part of the final package,” she said, adding that the agreement sends “a massive signal for EU trade relations” at a time when the bloc is actively seeking stronger economic partnerships beyond its immediate neighborhood.

According to European news website Euractiv, von der Leyen and European Council President Antonio Costa are scheduled to travel to India on January 27, where they are expected to formally sign the agreement with Prime Minister Narendra Modi. The high-level visit underscores the political importance both sides are attaching to the deal.

If finalized as planned, the pact would grant the European Union enhanced access to a market representing nearly 25 percent of the world’s population. In terms of population coverage, it would become the largest free trade agreement ever concluded by the EU, marking a significant expansion of its global trade footprint.

For New Delhi, agriculture has consistently remained a red line in trade negotiations. The sector employs more than 44 percent of India’s workforce, making any move to open domestic markets to European agricultural imports highly sensitive. Brussels has previously acknowledged this constraint, confirming that sensitive products such as sugar and dairy would remain outside the scope of the talks.

Reports suggest that Brussels and New Delhi have reached an understanding to lower India’s steep tariffs—currently as high as 150 percent—on European wine and spirits. However, the agreement does not extend to protecting European geographical indications, which cover region-specific products and traditional cuisines, an issue that has been a longstanding priority for the EU.

The timing of the agreement is particularly significant given the scale of existing trade ties. With bilateral trade exceeding $136 billion in the 2024–2025 period, the European Union has emerged as India’s largest commercial partner, reflecting the growing depth and diversity of economic engagement between the two sides.

Earlier this week, India’s Minister of Commerce and Industry, Piyush Goyal, indicated that negotiations with the EU are nearing their conclusion. Addressing a regional MSME summit in Gujarat, he also revealed that India is simultaneously engaged in discussions on a separate bilateral trade agreement with the United States, highlighting New Delhi’s broader push to expand and diversify its trade relationships.

Once finalized, the EU agreement will become India’s 19th trade pact—and its most significant to date in terms of scale and strategic impact. For both India and the European Union, the deal represents a calculated step toward greater economic resilience, closer cooperation, and a stronger position in an increasingly fragmented global trade environment.