The India-European Union Free Trade Agreement

India and the EU plan to conclude the long standing Free Trade Agreement (FTA) negotiations by the end of 2025. Simultaneously, discussions about a new strategic security and defense partnership to succeed the existing Strategic Roadmap (2020-2025) continue.
Next Summit: The subsequent EU India Summit is anticipated in 2025 to formalize key agreements.

Key Areas Under Discussion

• Trade and Investment
• Technology and Innovation
• Green Growth
• Security and Mobility

EU’s Demand for Lower Tariffs on Key Sectors

• The EU needs import lower duty on cars, wines, and spirits or otherwise they term them as non negotiable.
• Agriculture market access involves processed European products, especially from France & Italy.

India's Concerns Regarding EU Sustainability Norms

• Both Carbon Border Adjustment Mechanism (CBAM) and other deforestation rules will become non tariff barrier dealing in limiting India’s export gains.
• India welcomed the lenient CBAM compliance norms; however, concerns remain.

Government Procurement & Trade Barriers

• India has to deal with sensitive issue demands for greater access to public procurement sector possessed by the EU in India.

Trade Dynamics Between India-EU

• EU is India’s largest trading partner (12.2% share in total trade) followed by the US (10.8%) and China (10.5%).
• India is the 9th largest trading partner to the EU, accounting for 2.2% of the total trade in the EU 2023.
• Trade Volume in 2023-24
  • India’s Exports to EU: $75.9 billion (contributes to 17.4% of total exports).
  • India’s Imports from EU: $61.5 billion (9% of total imports).

Challenges and the History of Negotiations

• Long standing Negotiations
  • Negotiations were first started in 2007 and later were re launched in 2022. Rather than any progress, the negotiations have faced delays due to differences on tariffs, intellectual property, and labor standards.
• Political Pushes
  • The newer deadline is supposed to kick start the negotiations, which will now see the next round of talks in Brussels between March 10 and 14.

A successful FTA could ensure increased trade, investment flow, and economic cooperation between India and the EU. Challenges still remain on significant issues concerning market access, sustainability standards, and regulatory alignment.

Source: The Hindu