FILE PHOTO: India's Prime Minister Narendra Modi meets with Cyprus' President Nikos Christodoulides at the presidential palace in Nicosia, Cyprus, June 16, 2025. Iakovos Hatzistavrou/Pool via REUTERS/File Photo
FILE PHOTO: European Commission President Ursula von der Leyen reacts as she visits the Mahatma Gandhi memorial at Raj Ghat, in New Delhi, India, February 27, 2025. REUTERS/Anushree Fadnavis/File Photo

By Philip Blenkinsop and Manoj Kumar

BRUSSELS/NEW DELHI (Reuters) - India and the European Union are holding potentially decisive trade negotiations in New Delhi this week, seeking to resolve differences over agriculture, dairy and non-tariff barriers to meet an ambitious end of year deadline for a deal, Indian government and EU sources said.

New Delhi is seeking to deepen global partnerships after U.S. President Donald Trump doubled tariffs on Indian goods to 50% last month over India's Russian oil purchases, hitting exports such as textiles, leather and chemicals.

Negotiations, relaunched in 2022, have gained pace since Trump's re-election. Brussels too, faced with Trump's tariffs, has accelerated its push for trade alliances, sealing deals with Mexico and the South American Mercosur countries and stepping up talks with India, Indonesia and the United Arab Emirates.

A pact with the EU could also draw India closer to the West, after unease over Prime Minister Narendra Modi’s recent visit to China for a summit attended by Russian President Vladimir Putin and other leaders.

"Talks with the EU are progressing well,” an Indian government source said, citing Modi’s call with European Commission President Ursula von der Leyen last week, when both leaders pledged to conclude a deal this year.

So far 11 of the 23 chapters under negotiations have been finalised, covering customs, digital trade, intellectual property, competition, subsidies, dispute settlement and anti-fraud measures, the source said.

But sticking points remain.

India has ruled out concessions on agriculture and dairy, citing farmers’ livelihoods, while the EU is pressing for greater access to India’s market for automobiles and alcoholic beverages.

Differences also persist on rules of origin, food safety standards, labour and environmental obligations, and what Brussels views as restrictive Indian quality control orders that act as non-tariff barriers, an EU official said.

The sources spoke on condition of anonymity as the details about trade talks are not public.

India's commerce ministry and the EU office in New Delhi did not immediately respond to email requests for comments.

RUSSIAN OIL PURCHASES

Brussels is also pressing New Delhi over discounted Russian oil purchases, which EU officials say undermine sanctions against Moscow.

While unlikely to dominate the discussions, the issue could cast a pall over the negotiations and result in resistance in the European Parliament, which would have to approve any deal, EU officials said.

European Agriculture Commissioner Christophe Hansen and EU trade chief Maros Sefcovic will be in Delhi later this week for discussions with Indian counterparts.

In parallel, the EU’s Political and Security Committee, led by Chair Delphine Pronk and comprising ambassadors of all 27 states, will visit India from September 10-14 for meetings with officials, defence executives and think tanks.

Another contentious issue is the EU’s carbon border tax, which will levy carbon-intensive imports such as steel and aluminium from 2026.

Indian officials call it a disguised trade barrier while Brussels insists it is central to its climate policy.

EU officials said they were ready to offer flexibility in its implementation to address the concerns of small and medium-sized businesses.

(Reporting by Manoj Kumar and Philip Blenkinsop; Writing by Manoj Kumar; Editing by Emelia Sithole-Matarise)