New Delhi: The Congress Wednesday flagged concerns after the India-EU free trade pact was sealed, including the Modi government’s “failure” to secure an exemption for India’s aluminium and steel-makers from the Carbon Border Adjustment Mechanism and tariff reduction or relief on over 96% of the bloc’s exports to India.
Congress general secretary in-charge communications Jairam Ramesh said there are also concerns about the EU’s strict health and product safety rules, which will continue to be in force over Indian exports even after the FTA, as well as the concern about India’s largest export to the EU — refined fuels.
A large portion of this fuel is sourced from Russia, and there needs to be clarity on the future of these trade routes amidst pressure from Washington DC, the Congress leader said.
India and the 27-nation European Union first started negotiations for a Free Trade Agreement (FTA) in June 2007, he pointed out.
Ramesh said 16 rounds of negotiations took place but were suspended in May 2013 because of lack of agreement on many important issues.
Talks on an FTA remained suspended till June 2022 when they were resumed, he noted.
“This hugely-hyped FTA is the biggest trade opening India has given to any trade partner (tariff reduction or relief on over 96% of EU exports to India) and it is expected to double India’s imports from the EU. Its impact on India’s trade deficit will have to be monitored closely,” Ramesh said.
“The Modi government’s failure to secure an exemption for India’s aluminium and steel-makers from the Carbon Border Adjustment Mechanism (CBAM) is one of Congress’ key concerns regarding the FTA,” he said.
India’s aluminium and steel exports to the EU have already fallen from USD 7 billion to USD 5 billion and are only expected to fall further beginning this year due to the enforcement of the CBAM since January 1, 2026, he said.
“Over time, CBAM will also expand to include other categories of India’s industrial exports and can effectively nullify any gains India secures from the FTA,” Ramesh said.
He further said there are also concerns about the EU’s strict health and product safety rules, which will continue to be in force over Indian exports even after the FTA.
“This can easily become a non-tariff trade barrier, and the EU has been accused of the same by other trade partners. Questions over Intellectual Property (IP) rights for our pharmaceutical sector are also unanswered. The EU has also claimed privileged access to Indian services market in key sectors like financial services and maritime transport – exceeding India’s commitments with any other trading partner, including the UK and Australia,” Ramesh said.
“The inclusion of automobiles in the FTA is also a concern. The Modi Government opened up India’s automobile sector for the first time in its FTA with the UK, and the FTA with the EU only opens up further risk for domestic automobile manufacturers,” he said.
At a time when Electrical Vehicles (EV) are emerging as one of the most critical technologies of the 21st century, great care will have to be taken to ensure that India’s EV industry is not vanquished, Ramesh asserted.
“Of course, the final concern is about India’s largest export to the EU – refined fuels. A large portion of this fuel is sourced from Russia, and there needs to be clarity on the future of these trade routes amidst pressure from Washington DC,” he said.
India and the European Union Tuesday announced the conclusion of negotiations for the FTA, described as ‘mother of all deals’, under which 93 per cent of Indian shipments will enjoy duty-free access to the 27-nation bloc, while import of luxury cars and wines from the EU will become less expensive.
The deal, concluded after negotiations spanning about two decades, will create a market of about 2 billion people across the world’s fourth-largest economy, India, and the second-largest economic bloc, the EU.
Taken together, India and the EU account for 25 per cent of the global GDP and one-third (about USD 11 trillion) of international trade (about USD 33 trillion).
After holding summit-level talks with the EU’s top leaders, Ursula von der Leyen and Antonio Costa, Prime Minister Narendra Modi said India has concluded the biggest free trade agreement in its history with the European Union.