India-EU Free Trade Agreement: Piyush Goyal Promises Compassion for All 28 Nations Involved

The trade agreement between India and the European Union (EU) is expected to significantly boost India's exports to Europe over the next five years. Commerce and Industry Minister Piyush Goyal stated that this agreement, described as the "mother of all deals," will benefit all 28 member countries involved. The negotiations concluded on January 27, and the agreement is anticipated to be implemented within this year.

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India already enjoys a trade surplus with the EU in both goods and services. With 99% of India's exports set to receive duty-free access from the start, exports are projected to double within five years, according to Goyal. This duty-free entry will particularly benefit sectors like leather goods, sportswear, toys, and marine products.

Impact on Trade and Economy

In 2024-25, India's bilateral trade in goods with the EU amounted to USD 136.53 billion, with exports worth USD 75.85 billion and imports at USD 60.68 billion. The EU is India's largest trading partner for goods, accounting for about 17% of India's total exports. Meanwhile, India's services exports to the EU stood at USD 46 billion.

Goyal encouraged domestic businesses to seize this opportunity by increasing investments and expanding capacities. He addressed concerns about meeting the EU's strict safety and quality standards, asserting that Indian exporters possess the necessary capabilities and knowledge.

Addressing Challenges and Opportunities

The minister highlighted that the EU primarily exports innovative products needed by India in its development cycle. This creates a complementary relationship between the two regions. To ensure competitiveness, longer transition periods have been set for Indian industries where potential competition may arise.

Consumers are considered the largest stakeholders in this free trade agreement (FTA), as it aims to make goods more affordable for them. Goyal emphasised creating a balance where fair play prevails without predatory pricing or dumping of overcapacity.

Carbon Border Adjustment Mechanism (CBAM)

Regarding concerns over the Carbon Border Adjustment Mechanism (CBAM), Goyal assured that adequate safeguards are included in the trade agreement. CBAM applies universally, similar to GST in India, ensuring no discrimination against exporters to Europe.

The agreement includes provisions for Indian verifiers to certify carbon prints domestically, reducing costs for exporters. Taxes paid in India for carbon will be recognised and offset against CBAM payments.

Future Prospects

The minister noted that India is actively working towards decarbonising its economy. There is significant potential for exporting hydrogen, green ammonia, solar equipment, and wind equipment to the EU. Some Indian steel manufacturers are also transitioning to greener practices at a rapid pace.

Goyal mentioned that Europe plans to invest USD 800 billion in defence over the next five years, potentially requiring skilled labour from India or technology transfer for local manufacturing. This opens up multifaceted opportunities between India and Europe.

When asked about a potential deal with the United States, referred to as the "father of all deals," Goyal expressed optimism about concluding it swiftly due to ongoing positive negotiations. He also expressed hope that India's export target of USD 2 trillion could be achieved by 2032.

With inputs from PTI