India and the European Union aim to finalise a trade pact within three months, addressing issues related to agriculture, sustainability, and market access in a deal that could transform global commerce, a report said on Sunday. 

Negotiators report increased momentum in discussions, which have been given a boost from US President Donald Trump’s tariff offensive, a report from OneWorldOutlook said.

The report said that the trade pact offers the EU a safeguard against global volatility, but for India, it will be a strategic assertion of confidence following a decade of reforms and growth.

“Where the EU’s approach is driven by the need to shield its market from global volatility, India’s motivation is strategic. New Delhi sees this deal not as an act of desperation but as an assertion of its global economic confidence—a step toward shaping, rather than merely adapting to, the new trade order,” the report said.

India’s expanding manufacturing base, deepening digital economy, and robust domestic demand make it an indispensable market and production hub for European firms seeking alternatives to China, the report added.

Europe’s efforts to reduce reliance on Russia and China have made India a critical partner in its diversification strategy, despite New Delhi’s ongoing relations with Moscow, the report noted.

India has opposed binding sustainability clauses associated with the EU’s Carbon Border Adjustment Mechanism (CBAM), with Union Commerce Minister Piyush Goyal labelling them “unfair” to penalise developing economies for historical emissions they did not cause.

If a trade deal is finalised, the pact would mark India’s arrival as a decisive player in shaping global trade rules; if postponed, it would reflect the realism of a complex negotiation between equals, the report noted.