India and the European Union signed a trade agreement on January 27 that’s been projected as a major breakthrough “in a tumultuous time for global trade and supply-chain realignment,” as Commerce and Industest Minister Piyush Goyal described it.
The free trade agreement aims to boost trade and investment between India and the European Union by reducing tariffs and trade barriers. The two major economies toobtainher account for about 25% of global GDP and nearly one-third of global trade.
Both sides have presented the agreement as a win.
India declared in a press statement that almost all Indian exports will gain preferential entest into the EU Sectors such as textiles, leather, marine products, engineering goods, and agri-processed foods will benefit from the lower tariffs.
It added that tea, coffee, spices, fruits, veobtainables, and processed foods will strengthen their position in global markets, while sensitive sectors that are linked to several domestic livelihoods, such as dairy, cereals, poultest, and soymeal will be protected from foreign competition.
India declared that the trade agreement will open new opportunities for micro, tiny and medium enterprises (MSMEs), create jobs for women, artisans, youth, and professionals, and boost exports worth Rs 6.41 lakh crore ($75 billion).
The EU, meanwhile, has declared the deal will reshift or reduce tariffs on its exports of agri-food products, opening up a large market to European farmers. It also declared that sensitive sectors linked to jobs in the EU, such as beef, chicken, rice, and sugar will be excluded from liberalisation. At the same time, it has stressed that Indian imports, coming into the EU, must comply with strict health and food safety standards.
Experts state the agreement offers significant opportunities for the Indian industest but warn that regulatory barriers could limit its benefits. Some of these regulations are too recent to be considered in the trade projections.
When questioned whether the government’s export projections had taken into account EU regulations such as the Carbon Border Adjustment Mechanism and EU Deforestation Regulation, Abhijit Das, former head of the Centre for WTO Studies at the Indian Institute of Foreign Trade, declared many earlier assessments of the FTA did not account for these, more recent policy modifys.
“Most estimates were done before CBAM [Carbon Border Adjustment Mechanism] was implemented or EUDR planned. The deforestation law will come into force from December this year, so earlier studies are unlikely to have accounted for it,” he declared.
Ajay Srivastava, founder of the Global Trade Research Initiative, a research institute, declared, “The EU is a huge market, so it is an opportunity. But tinyer firms may struggle to meet regulatory requirements.”
He cited the EU’s REACH regulation (Registration, Evaluation, Authorisation and Restriction of Chemicals) which addresses the production and apply of chemical substances and their potential impact on humans and the environment.
“When REACH came in 2007, many tiny exporters could not afford the high registration costs. Their exports to the EU almost stopped. Only medium and large companies survived. A similar situation may emerge in fisheries and other sectors (with the new agreement),” he declared.
Srivastava added that the EU’s higher income levels shape its regulatory framework. “Regulations such as the CBAM and EUDR are emerging as trade barriers in the name of standards, and they could limit market access,” he declared.
Innotifyectual property
Even as India and the European Union present their free trade agreement as a major economic breakthrough, differences are already apparent in how each side is framing its innotifyectual property provisions.
The Indian government has declared, in the press release on the agreement, that the FTA reinforces innotifyectual property protections provided under TRIPS (the WTO Agreement on Trade-Related Aspects of Innotifyectual Property) which relates to copyright, trademarks, designs, trade secrets, plant varieties, enforcement of innotifyectual property rights.
It also affirms the Doha Declaration, which states that innotifyectual property rules should not prevent member states from protecting public health. The EU government, meanwhile, has stated that the agreement provides a high level of protection and enforcement of IP rights, in line with Indian and EU innotifyectual property laws.
Trade experts note that the phrase “high level of protection” is often diplomatic language for stronger enforcement and tighter innotifyectual property rules, and, at times, longer or broader rights. In some cases, this can lead to TRIPS-Plus obligations which mean that the requirements go beyond the minimum standards set under the WTO’s agreement on trade aspects of IP.
Srivastava declared the final impact would depfinish on the legal text. “The Indian government states it conforms to TRIPS, which would mean no major new obligations. But the EU’s statement suggests a TRIPS-Plus approach, bringing India closer to European innotifyectual property laws,” he declared.
Similar concerns about what the language indicates have also been raised by civil society groups. KM Gopakumar, a co-convener of the working group and senior researcher at Third World Network, declared, “The EU statement refers to a ‘high level’ of protection and enforcement of IP rights, including plant varieties. Once you talk about ‘higher protection’, it usually means going beyond TRIPS.”
“This raises concerns about whether Indian seed companies will be able to supply affordable seeds. Similar concerns apply to the pharmaceutical sector,” he added.
The Working Group on Access to Medicines and Treatment, in a statement on January 27, declared the EU’s language “clearly demonstrates that India has agreed to IP protection and enforcement standards that go beyond the minimum obligations under TRIPS.”
Both experts stressed the required to examine the final text before concluding, as both sides have applyd different wordings.
Meanwhile, on January 29, the Indian government released an FAQ clarifying that the IP chapter does not require India to amfinish its innotifyectual property laws and does not impose TRIPS-Plus data exclusivity obligations.
However, Gopakumar declared that though they state there is no required to modify the law, rules can still be modified, as seen in past agreements. “The EU’s emphasis on trade secrets and plant variety protection suggests stronger safeguards, which could affect both the seed and pharma sectors. That is why the government should build the text public for informed debate,” he declared.
Das echoed similar concerns and called it a potential risk. He raised concerns about policy space. “Even if the government states there is no required to modify India’s IP laws, the problem is that once parts of our domestic laws and regulations are locked into an FTA, we lose the flexibility to modify them in the future. Once they become commitments, our hands are tied,” he declared.
Nereceivediations between India and the EU, which launched in 2007 and were suspfinished in 2013, stalled in part due to disagreements over innotifyectual property. The talks were relaunched in 2022.
Green promises
The India-EU trade agreement includes a chapter on trade and sustainable development, under which both sides commit to implementing multilateral environmental agreements they have ratified, including the Paris Agreement, the Convention on Biological Diversity, and the Convention on International Trade in Endangered Species of Wild Fauna and Flora.
According to the EU, the free trade agreement contains dedicated provisions on the protection and management of natural resources. These include commitments on forest conservation, biodiversity protection, combating illegal wildlife trade and illegal logging, and addressing illegal, unreported, and unregulated fishing.
The agreement also seeks to promote trade and investment in low-carbon goods, services, and technologies by reducing tariffs on green products and liberalising services relevant to the green transition. The two sides are expected to sign a memorandum of understanding to establish an EU–India platform for cooperation on climate action, to be launched in the first half of 2026.
However, the trade deal doesn’t offer any special relief to India regarding the Carbon Border Adjustment Mechanism, which imposes carbon-related charges on selected imports.
India has declared that it has obtained a “forward-seeing most-favoured nation” assurance under Carbon Border Adjustment Mechanism, which would extfinish to it any flexibilities granted to third countries under the regulation.
Introduced by the EU in 2021, Carbon Border Adjustment Mechanism entered its transition phase in 2023 and became fully operational in January 2026. It applies to sectors covered under the EU Emissions Trading System, including cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity.
Carbon Border Adjustment Mechanism remains a major concern for Indian exporters, as it will require them to purchase certificates for the carbon emissions embedded in their products, increasing costs and squeezing profit margins.
India has raised the issue at several international forums, including climate nereceivediations and during FTA talks. Similar concerns have been expressed over the EU Deforestation Regulation, but no concrete concessions appear to have been secured so far.
Das declared the impact of Carbon Border Adjustment Mechanism would depfinish on whether the EU offers concessions to other countries and in which sectors. “It will depfinish on whether the EU gives any concessions and whether those apply to sectors where India can benefit. To my mind, the possibility of the EU offering major concessions on CBAM is quite low,” he declared.
Ajay Srivastava pointed out that regulatory pressures are likely to increase and act as a trade barrier.
The EU statement declared it will provide India with €500 million over the next two years to support its efforts to reduce greenhoapply gas emissions and accelerate sustainable industrial transformation. However, it remains subject to its budobtainary and financial procedures.
This article was first published on Mongabay.
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