Carbon tax, critical minerals to figure in India-EU trade talks early next year

With 14 rounds of negotiations already completed for a potential Free Trade Agreement (FTA), India’s Commerce and Industry Minister Piyush Goyal is set to travel to the European Union on January 8 and 9 for what the Commerce Ministry has described as the final and most arduous leg of the ongoing trade talks. The visit will precede the expected travel of the 27-member bloc’s leadership to New Delhi for India’s Republic Day celebrations on January 26.Government sources indicated that both sides are likely to hold discussions on issues such as the Carbon Border Adjustment Mechanism (CBAM), Geographical Indications (GI), critical minerals, intellectual property rights (IPR), and several other trade and regulatory matters. The two sides are learnt to have exchanged their respective lists for a potential deal on trade in GI-tagged products, even as separate negotiations continue on an FTA as well as an investment protection pact. India defines GI-tagged goods as those “originating from a specific location and having distinct nature, quality, and characteristics linked to that location.”

Sources said the EU wants no restrictions, including duties, on the export of critical minerals from India. Recently, the EU challenged Indonesia’s ban on nickel exports at the World Trade Organization (WTO).
Sources further noted that India is expected to seek carve-outs or exemptions for stainless steel exports to the EU in view of higher duties imposed by the bloc. Last week, the Ministry of Commerce and Industry held meetings with stakeholders from the auto and steel sectors. The EU has proposed expanding CBAM to 180 downstream goods, with CBAM certificates slated to be sold from February 1, 2027, for goods imported in 2026.Minister Goyal held discussions with EU Commissioner for Trade and Economic Security Maroš Šefčovič in New Delhi on December 8 and 9 to provide strategic guidance to negotiating teams as both sides work towards concluding the FTA at the earliest. EU Ambassador to India Hervé Delphin had earlier described the talks as entering a fundamentally new phase, calling them “EU-India FTA negotiation 2.0,” after the 14th round. The EU is India’s largest trading partner, with bilateral goods trade reaching $137.5 billion in FY2023-24.

While India is seeking greater market access and lower duties for its labour-intensive exports to the EU, the bloc aims to export more automobiles and liquor to India. India has also sought recognition as a data-secure country to enable trade in digital services under the EU’s data transfer rules, apart from increased access for its skilled professionals.

Earlier, government sources had said that the EU’s approval for India’s fisheries exports could offset the loss of export avenues due to US tariffs, adding that the talks are proceeding well and are “on track to be concluded by the year-end.”