India and the European Union are on the cusp of finalizing a historic free trade agreement (FTA), a culmination of nearly 18 years of on-again, off-again negotiations that began in 2007 and relaunched in 2022. A formal announcement is widely anticipated around the 16th India-EU Summit in New Delhi on January 27, 2026, where European Council President António Costa and European Commission President Ursula von der Leyen will be chief guests for India's Republic Day celebrations. This comprehensive pact, termed the India-EU Free Trade Agreement, is set to be India's largest and most intricate trade deal, encompassing a broad spectrum of goods and services across the EU's 27-member customs union. Despite the imminent conclusion, significant challenges, or 'risks,' persist. Prominently, the EU's Carbon Border Adjustment Mechanism (CBAM), which levies climate-linked charges on carbon-intensive imports like steel and aluminum, poses a potential new barrier for Indian exporters, particularly Micro, Small, and Medium Enterprises (MSMEs). India is actively seeking exemptions or safeguards against CBAM to prevent the deal from becoming structurally imbalanced. Additionally, India aims for the EU to ease a 'dense web' of non-tariff barriers, including stringent sanitary and phytosanitary (SPS) norms, regulatory delays in pharmaceutical approvals, and complex certification requirements. Services mobility also remains a contentious area, with India pushing for data-secure status, easier movement for professionals, and social security agreements, while the EU seeks greater access to India's financial and legal services markets. Other flashpoints include government procurement, sustainability commitments, and intellectual property rights. The agreement strategically excludes sensitive sectors like agriculture and dairy, reflecting India's focus on protecting domestic producers. If successfully navigated, this FTA promises to bolster bilateral trade, investment flows, and supply-chain integration, offering India preferential access to one of the world's most affluent markets.