India-EU Trade Pact: Addressing Non-Tariff Barriers

Stockholm, Jun 12 (PTI) Finding solutions to address non-tariff barriers would be important for the proposed free trade agreement (FTA) between India and the European Union (EU) and both sides are actively working on resolving these issues, Commerce and Industry Minister Piyush Goyal said on Thursday.

He said the two sides are "pretty" close to finalising the talks for the proposed free trade pact.

"Significant progress has been made. More than half the chapters are ready. In terms of content, I would say we are almost 90 per cent ready for market access. The important issues to be addressed are non-tariff barriers and how we will make it smoother, easier, and better to do business between the EU and India," Goyal told reporters here.

He added that both India and the EU are in active discussions to find solutions to make business smooth for companies of both sides.

"Unless countries recognise that over regulation and barriers to trade will be met with reciprocal action, everybody suffers. We are committed to deregulation, to finding solutions to the high cost of regulation, the non-tariff barriers that these regulations cause and the impediments to free trade. I am quite hopeful that we will find very robust solutions to this problem," the minister said.

He is here on an official visit to meet his Swedish counterpart and companies for promoting trade and investments between the two countries.

Sweden is a member of the 27-nation EU bloc.

Key Indian exports that routinely face high barriers in the EU include -- chillies, tea, Basmati rice, milk, poultry, bovine meat, fish, chemicals products.

Most non-tariff measures (NTMs) are domestic rules created by countries with an aim to protect human, animal or plant health and environment. NTM may be technical measures such as regulations, standards, testing, certification, pre-shipment inspection or non-technical measures like quotas, import licensing, subsidies, government procurement restrictions.

When NTMs become arbitrary, beyond scientific justification, they create hurdles for trade and are called NTBs (non-tariff barriers).

India's exports are far below potential as they face NTBs in regions, including the EU, the US, China, Japan, and Korea.

According to think tank GTRI, the EU has set MRL (minimum residual limit) for tricyclazole, a fungicide in rice, to 0.01 mg per kg as against the ten times higher limit earlier.

Similarly, the EU has set MRL for aflatoxins B1 level in chilies and other spices at 5 to 10 ppb (parts per billion).

The minister said negotiations on services and rules or origin have started.

To give an impetus to the ongoing talks for the FTA, EU Commissioner for Trade and Economic Security Maros Sefcovic is expected to visit New Delhi on June 28-29.

On the Carbon Border Adjustment Mechanism (CBAM), Goyal said this measure is "not good" as it is also a kind of a non-tariff barrier.

This carbon tax, if imposed, will do injustice to Indian industry, he said, adding that if the EU will take any such step, India will have to respond to that.

FTA talks are happening in a good environment and it will not be good to impose carbon tax on Indian goods, he added.

"Our talks are going on the issue to find ways to deal with this," the minister said, adding that some good solutions will come out on this.

On February 28, Prime Minister Narendra Modi and European Commission President Ursula von der Leyen agreed to seal a much-awaited free trade deal by this year amid rising concerns over US President Donald Trump's policy on tariffs.

In June 2022, India and the 27-nation EU bloc resumed the negotiations after a gap of over eight years. It stalled in 2013 due to differences over the level of opening up of the markets.

India's bilateral trade in goods with the EU was USD 136.4 billion in 2024-25 (exports USD 75.75 billion, imports USD 60.65 billion), making it the largest trading partner of India for goods. The EU market accounts for about 17 per cent of India's total exports, while the EU's exports to India make up 9 per cent of its total exports.

EU's investments in India are valued at over USD 117 billion with around 6,000 European companies present in India. India's investments in the EU are valued at around USD 40 billion.