India hopes to conclude a free trade deal with the European Union in the first half of 2011, if not earlier, and both sides are just adding the "finishing touches", Trade Minister Anand Sharma said.

India and its largest trade partner had hoped to conclude a deal by October 2010 but there were differences over issues such as market access and the EU's moves to tie a deal to India's performance on the environment and child labour.

Brussels says the pact could open up export opportunities worth $9 billion for India.

Sharma told reporters the deal was "just waiting finishing touches" and that an agreement would be reached "hopefully in the first half, if not earlier, of 2011".

"I remain optimistic before Easter," he added.

India and the EU bloc had also come to an understanding on a long-standing dispute over the seizures of Indian generic drugs on European soil, Sharma said.

The case dates back to the seizure by Dutch customs in December 2008 of a blood pressure drug in transit from India to Brazil. The row pitted the intellectual property rights of drugs companies against access to cheaper medicines.

Aid activists had said the case represented a more aggressive stance by patent rights holders which could undermine the supply of cheap drugs to developing countries.

Indian trade officials initiated the first steps of a trade dispute at the World Trade Organisation (WTO) this year and have reserved their right to escalate the case even as they work towards a solution with their European counterparts.

"I think we have reached an understanding," Sharma said.

The minister also flagged India's concern over a gaping trade deficit with fellow Asian giant China and said he hoped to create a mechanism to give Indian companies greater market access to the Chinese market. (Reuters)