Merz Signals EU-India Trade Deal Hopeful By January
German Chancellor Friedrich Merz’s remarks in Ahmedabad have injected fresh optimism into one of the world’s longest-running trade negotiations, as the European Union and India edge closer to a landmark free trade agreement that could reshape economic ties at a time of global uncertainty.
Speaking on Monday during his first official visit to India since taking office, Merz said there was a real possibility that the EU and India could finalise and sign a comprehensive trade deal by the end of January. If negotiations conclude in time, he added, top European Union leaders would travel to India to formally seal the agreement. The statement came after his meeting with Prime Minister Narendra Modi in the western Indian city, signalling strong political backing at the highest level.
“In any case, they will take another major step forward to ensure that this free trade agreement comes into being,” Merz told reporters, underlining the urgency both sides now attach to the talks. While European Union officials have not yet publicly commented, Merz’s words reflect a growing momentum that diplomats and trade officials have struggled to achieve for years.
Negotiations on an EU-India free trade pact have been on and off for more than a decade, often bogged down by disagreements over tariffs, market access and regulatory standards. However, the global trade environment has shifted dramatically in recent months. Rising protectionism, supply chain disruptions and geopolitical tensions have pushed major economies to rethink their dependence on traditional partners.
For both India and the European Union, the deal is increasingly seen as a strategic opportunity to reduce reliance on China and Russia while strengthening ties with a trusted economic partner. In 2024, bilateral trade between India and the EU reached 120 billion euros (about $140.21 billion), making the EU India’s largest trading partner. A free trade agreement could significantly expand this figure, opening new markets for businesses on both sides.
Talks have gained particular urgency following developments in the United States. Under President Donald Trump, Washington raised tariffs on Indian goods and pressured New Delhi to halt purchases of Russian oil, straining U.S.-India trade relations. A separate India-U.S. trade deal collapsed last year after a breakdown in communication between the two governments, leaving India looking for alternative economic alliances.
Against this backdrop, the EU-India pact would also build on the European Union’s recent trade agreement with South America’s Mercosur bloc. Together, these deals support Europe’s broader push to diversify its trade networks as global economic rules continue to evolve.
Indian Trade Minister Piyush Goyal, speaking at a separate event in Gujarat, said negotiations were “almost at their final stages,” reinforcing hopes that the long-delayed agreement may finally be within reach. German officials, meanwhile, described Merz’s discussions with Prime Minister Modi as “very intensive,” suggesting that both leaders are personally invested in driving the talks forward.
Despite the optimism, key challenges remain. The European Union is pressing for significant tariff reductions on cars, medical devices, wine, spirits and meat, along with stronger intellectual property protections. India, on the other hand, is seeking duty-free access for labour-intensive goods such as textiles and footwear, as well as faster recognition and market access for its rapidly growing automotive and electronics sectors.
Whether these differences can be bridged in the coming weeks remains to be seen. Still, Merz’s comments have raised expectations that years of negotiation could soon culminate in a deal with far-reaching economic and geopolitical implications. If concluded, the EU-India free trade agreement would mark not just a commercial milestone, but a statement of intent in an increasingly fragmented global trade landscape.