The European Union’s (EU) recent Mercosur trade deal faces an uncertain future after the European parliament quickly referred it to the EU’s court of justice for legal opinion. Can India-EU free trade agreement (FTA) avoid a similar fate? Mint unpacks the development and compares the two deals.
When was the EU-Mercosur deal signed?
On 17 January, 2026, the EU signed an interim trade agreement with Mercosur, a trade bloc comprising Argentina, Brazil, Paraguay, Uruguay and Bolivia. The deal, which was agreed after 25 years of negotiations, eliminates tariffs on 90% of the bilateral trade between the two regions and creates a large market involving 750 million people representing 20% of the global gross domestic product (GDP).
But to the surprise of many, the European Parliament, within days, referred the agreement to the Court of Justice of the European Union for a legal opinion to ascertain if the deal is compatible with the EU’s policies.
What happens now?
Experts are divided about the fate of the EU-Mercosur trade agreement. Some say the legal process would take at least a couple of years, which means the implementation of the deal may get delayed by three years or more.
Media reports suggest the European Commission, the executive arm of the EU, may go for a provisional implementation of the agreement, bypassing the parliament. This may not be easy, as the deal faced stiff opposition.
France, Poland, Austria, Ireland and Hungary voted against the deal in the European Council. Some even argue that the deal has been derailed for good.
How does India-EU FTA compare to the Mercosur deal?
Like the Mercosur deal, the India-EU FTA took two decades to fructify. It also creates a large free trade area. But the India-EU deal is much bigger. It involves 2 billion people and creates a $27 trillion market accounting for 25% of the global GDP. India has offered tariff concessions on 97.5% of imports from the EU, while the EU has dropped tariffs on 99.5% of India’s exports.
India has offered to cut tariffs on 97.5% of EU imports, while the EU will eliminate duties on 99.5% of Indian exports.
Can the India-EU FTA escape Mercosur’s fate?
The biggest challenge that the Mercosur trade deal faced in the EU was fear of low-cost agricultural products from South America flooding Europe. The India-EU FTA has avoided most of the subjects that are sensitive to the two parties. This includes agriculture and dairy sectors.
That should reduce opposition to the deal. But experts have warned that while there is absolute clarity on tariff cuts, there is ambiguity regarding intellectual property, sustainability, the environment, and labour law conventions. If not handled well, they could throw a spanner in the operation of the deal.
What next for the India-EU deal?
Though the negotiations for the trade deal were successfully completed on 21 January 2026, the agreement is not legally binding yet. At the EU’s end, the deal will first undergo legal vetting. It will then be translated into 24 EU official languages and sent to all 27 EU member states.
This should take months. The formal signing of the FTA will happen by the end of 2026. This will be followed by ratification by the European Parliament. Simultaneously, the Indian government’s cabinet will approve the deal. If all goes well, the deal will come into force by early 2027.