EU Steel and Ceramic Sectors Pressure FTA as Climate Concerns Weigh on Talks

EU and India Unlikely to Finalize Trade Agreement by End of Year

European and Indian negotiators have signaled that finalizing a comprehensive Free Trade Agreement (FTA) by the end of 2025 is unlikely amid unresolved disputes and shifting geopolitical priorities. The FTA, seen as a major step toward deepening economic ties between the two largest democracies, has been stalled over concerns raised by European industries, particularly in steel and ceramics, about the potential for carbon leakage and unfair competition from Indian imports. These concerns have intensified amid the EU's ongoing implementation of its Carbon Border Adjustment Mechanism (CBAM).

Indian trade officials remain optimistic, emphasizing the mutual benefits of the deal, including increased market access and cooperation in emerging sectors like green energy and digital trade. However, European industry groups have urged policymakers to adopt a sector-specific approach, ensuring that strategic industries are not disproportionately impacted by the agreement according to industry leaders. With negotiations now entering a new phase, both sides are recalibrating expectations.

Recent developments in India's energy sector, including a $12 billion investment by Brookfield in green energy projects, highlight the country's growing attractiveness to foreign capital. This surge in investment is likely to play a key role in shaping the next phase of trade negotiations, as India continues to diversify its economic partnerships.

Industry Concerns Over Carbon Leakage Intensify

European industry leaders have grown increasingly vocal about the risks posed to domestic producers by the EU-India FTA. The European ceramic, aluminium, and steel sectors have raised concerns that opening EU markets to Indian imports without equivalent climate standards could undermine the EU's climate goals and threaten thousands of jobs according to industry reports. The European Green Deal and the CBAM are central to these concerns, as they aim to internalize carbon costs and prevent the outsourcing of high-emission production to countries with less stringent environmental regulations according to policy analysis.

Industry representatives argue that without sector-specific safeguards, the FTA could erode the EU's climate leadership and create a race to the bottom in global emissions standards. The joint press statement from the steel and automotive industries in October 2025 underscored the need for a pragmatic transition plan that balances climate ambition with economic competitiveness according to industry sources. These concerns are now shaping the broader political discourse ahead of the next round of negotiations.

Trade Diversification Drives Regional Alliances

As the EU-India FTA remains in limbo, India is turning to other regional partners to strengthen its trade networks. The proposed India-Qatar FFTA, for example, is expected to deepen economic ties beyond traditional energy exports, opening new opportunities in sectors like technology, agriculture, and infrastructure. This agreement aligns with India's broader strategy to diversify its trade relationships across the Gulf and reduce dependence on any single market according to trade experts.

India's trade with Qatar has historically been energy-focused, with LNG imports forming a significant portion of the bilateral relationship. However, the proposed FTA seeks to expand this cooperation to include high-value manufacturing and digital trade. For Qatar, the agreement represents access to India's growing consumer base and its expertise in renewable energy and technology according to economic analysis. The potential for improved logistics and digital trade infrastructure could also enhance regional connectivity, supporting India's ambitions in the Indian Ocean Region (IOR) according to regional experts.

Green Energy Investments Signal Future of Trade

India's recent green energy investments have positioned it as a global hub for sustainable development. Brookfield's $12 billion commitment in Andhra Pradesh, including a 3-GW clean energy-powered data center, is among the largest foreign investments in the country's renewable sector. This project not only supports India's net-zero goals but also aligns with the EU's climate agenda, making it a potential model for future collaboration according to industry observers.

The hybrid wind-solar project in Kurnool, backed by a $1.12 billion investment from Brookfield and Axis Energy, has already attracted significant government support. The Rural Electrification Corporation Limited's $846 million funding for the project marks one of the largest private-sector loans from a public institution, signaling India's readiness to scale green infrastructure according to financial reports. These developments are likely to shape the next phase of EU-India trade discussions, as renewable energy and green hydrogen become central to global climate strategies.

Outlook for the EU-India FTA

With the end of 2025 approaching, both the EU and India are prioritizing pragmatic steps to build trust and address outstanding concerns. European negotiators are calling for a transition period that allows for sectoral adjustments and technology transfers, while Indian officials are emphasizing the long-term benefits of expanded trade. The outcome will depend on how effectively both sides can balance economic growth with climate responsibility according to policy analysts.

The finalization of the EU-India FTA will have significant implications for global trade dynamics, particularly in sectors like steel, data centers, and green energy. For now, the focus remains on resolving key sticking points and setting a foundation for a more resilient and sustainable trade relationship in the years ahead.