After long negotiations, as India and the European Union move closer to finalising their Free Trade Agreement (FTA), policy think tank Global Trade Research Initiative (GTRI) has urged New Delhi to press Brussels to dismantle a “dense web” of non-tariff barriers that continue to restrict Indian exports, especially in agriculture and pharmaceuticals.
GTRI warned on Monday (January 19, 2026) that while tariff reductions grab headlines, regulatory barriers often blunt the real trade benefits for Indian exporters.
The conclusion of the India–EU FTA negotiations is expected to be announced on January 27 during the EU delegation’s visit to New Delhi. European Council President Antonio Luis Santos da Costa and European Commission President Ursula von der Leyen will also attend India’s 77th Republic Day celebrations as chief guests.
Regulatory roadblocks hitting Indian exports
According to GTRI, Indian products face multiple regulatory hurdles in the EU, including long delays in pharmaceutical approvals, stringent sanitary and phytosanitary norms for agricultural exports, and complex testing and certification requirements.
Agricultural products such as basmati rice, spices and tea are frequently rejected or subjected to enhanced inspections due to sharply lowered EU pesticide residue limits. Marine exports also face higher sampling rates over antibiotic concerns.
In manufacturing, compliance with regulations like REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals) and evolving climate rules significantly increases costs — a burden that falls disproportionately on MSMEs with limited certification capacity.
“India argues that while these measures are framed as consumer or environmental safeguards, their cumulative effect functions as de facto trade barriers,” GTRI said.
Tariff cuts alone won’t boost exports.
GTRI Founder Ajay Srivastava stressed that tariff liberalisation alone will not deliver meaningful export growth unless accompanied by regulatory cooperation, faster approvals, and mutual recognition mechanisms.
“Without addressing non-tariff barriers, the export gains from the FTA will remain limited,” he said.
Carbon tax emerges as a major concern.
A critical sticking point is the EU’s Carbon Border Adjustment Mechanism (CBAM), which came into effect on January 1 for carbon-intensive products such as steel and aluminium.
Srivastava said India may seek CBAM carve-outs similar to those reportedly offered to the United States. Without exemptions or safeguard clauses, the FTA risks becoming structurally unbalanced, allowing EU goods duty-free access to India while Indian exports face climate-linked border taxes.
MSMEs are especially vulnerable due to high compliance costs, complex reporting requirements, and the risk of penalties based on inflated default emission values.
Services, data and mobility challenges
On the services front, GTRI flagged EU restrictions on remote delivery of services, which often require Indian firms to establish local offices and meet high minimum salary thresholds for professionals.
India is also seeking recognition as a “data-secure” country under the EU’s General Data Protection Regulation (GDPR), which would enable smoother cross-border data transfers. Without this status, Indian firms face higher compliance costs compared to competitors in Japan and South Korea.
The EU, however, wants closer alignment with GDPR standards, while India maintains that its Digital Personal Data Protection Act, 2023, already offers adequate safeguards.
India is also pushing for easier short-term business visas, totalisation agreements to avoid double social security contributions, and mutual recognition of professional qualifications.
Government procurement and GI disputes
The EU is seeking access to India’s nearly $600 billion government procurement market, including contracts from central ministries and public sector undertakings. India is likely to offer only limited access, citing restricted foreign access to EU procurement markets.
Separate negotiations are also underway on Geographical Indications (GI) and investment protection. The EU wants automatic GI recognition for products like Champagne, Roquefort and Prosciutto di Parma, while India insists on standard registration processes.
Investment protection remains sensitive.
With cumulative EU foreign direct investment in India exceeding €100 billion as of 2024, investment protection is another sensitive area. India wants the agreement aligned with its Model Bilateral Investment Treaty, which limits investor protections to preserve regulatory autonomy, while the EU is pushing for stronger safeguards.
India had terminated most of its bilateral investment treaties with EU nations in 2015, citing excessive legal exposure.
As negotiations enter the final stretch after nearly 18 years, policymakers face pressure to ensure that the deal delivers genuine market access, not just headline tariff cuts.
