India and EU Finalise Another Round of Talks on Free Trade Agreement to Conclude in Two Phases

India and the European Union (EU) have wrapped up another round of discussions on a proposed free trade agreement (FTA). The 11th round of negotiations concluded on May 16, with both parties agreeing to finalise the deal in two phases. This decision stems from the unpredictable global trade environment, notably influenced by US tariff actions under President Donald Trump.

Representative image

Commerce Secretary Sunil Barthwal highlighted the importance of prioritising core trade issues. "If some of the issues which may not be very core to the trade, maybe taking some more time, then it is better to focus on core trade issues. So, we say that first things first...We are also discussing with the EU what can be the early harvest of the first tranche, where we can do faster," he stated.

Focus on Market Access and Trade Barriers

The recent talks concentrated on market access for goods, services, and investment. India has previously adopted a phased negotiation strategy with countries like Australia and is now applying a similar approach with the EU. The EU seeks significant duty reductions in sectors such as automobiles and medical devices. Additionally, they are pushing for tax cuts on wines, spirits, meat, poultry, and a robust intellectual property framework.

Commerce and Industry Minister Piyush Goyal visited Brussels on May 1 to assess progress on the agreement. The negotiations resumed in June 2022 after an eight-year hiatus due to disagreements over market openness levels. Prime Minister Narendra Modi and the European Commission President have committed to finalising this long-awaited trade deal by year-end.

Trade Dynamics Between India and EU

The India-EU trade pact covers 23 policy areas including Trade in Goods, Trade in Services, Investment, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade Remedies, Rules of Origin, Customs and Trade Facilitation, Competition, Trade Defence, Government Procurement, Dispute Settlement, Intellectual Property Rights, Geographical Indications, and Sustainable Development.

In 2023-24, bilateral trade in goods between India and the EU reached USD 137.41 billion. India's exports amounted to USD 75.92 billion while imports stood at USD 61.48 billion. This makes the EU India's largest trading partner for goods. The EU accounts for about 17% of India's total exports; conversely, India's imports represent 9% of EU's overseas shipments.

Potential Benefits for Indian Exports

If successfully concluded, this pact could enhance competitiveness for Indian exports like ready-made garments, pharmaceuticals, steel products, petroleum products, and electrical machinery in the EU market. In addition to goods trade, bilateral trade in services between India and the EU was estimated at USD 51.45 billion in 2023.

The ongoing negotiations aim to establish not only a free trade agreement but also an investment protection agreement and an accord on geographical indications (GIs). These agreements are expected to bolster economic ties between India and the EU significantly.

With inputs from PTI