India-EU FTA Negotiations to Restart June 27


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The first round of India-EU FTA negotiations will take place in New Delhi between June 27 and July 1. Talks to reach an investor protection agreement and a geographical indications agreement will be held in parallel.

India and the European Union (EU) look ready to restart their free trade agreement (FTA) talks on Monday, after a nine-year gap. The first round of negotiations will take place in New Delhi between June 27 and July 1.

EU is India’s second largest trade partner

An FTA would be a big win for New Delhi as the EU is India’s second largest trading partner. India-EU merchandise trade reached US$116.36 billion in 2021-22 as per latest government data, showing a year-on-year growth of 43.5 percent. Moreover, India enjoys a trade surplus with the EU. Indian exports to the EU jumped 57 percent to reach US$65 billion in FY 2021-22.

In addition to FTA negotiations, India and EU will also discuss a stand-alone investment protection agreement (IPA) and a geographical indicators (GIs) agreement. The decision was taken during the India and EU Leaders’ Meeting, held at Porto in early May 2021.

After an almost decade long pause, efforts were made to resume negotiations to secure a trade deal that is balanced, ambitious, comprehensive, and mutually beneficial. The proposed IPA will provide a legal framework for cross-border investments to enhance investor confidence while the GI pact aims to establish a transparent and predictable regulatory environment and to facilitate trade of GI products, including handicrafts and agricultural commodities.

All three agreements will be negotiated in parallel and concluded simultaneously.

High-level support gives India-EU trade deal much needed momentum

A visit by European Commission President Ursula von der Leyen to New Delhi in April this year was followed by Prime Minister Shri Narendra Modi’s three-country visit to Europe (Denmark, Germany, France) in May. Together, the high-level bilateral and summit interactions have helped accelerate India-EU FTA discussions and define clear goals on the FTA roadmap.

Previous efforts for an FTA had been frustrated due to differences in the scope and expectations from a trade deal. This included disagreements on custom duties on automobiles and liquor and the movement of professionals.

Now, as the world continues to combat a pandemic and is dealing with outcomes of a sudden Eurasian war, shocks to the global supply chain are becoming more frequent. It is thus likely that such bilateral and multilateral trade deals get pursued more aggressively among key markets – to widen liberal and uninterrupted access to goods and services, with renewed emphasis on fairer and more transparent terms.

For instance, India’s current economic position, targeted investments in developing public infrastructure alongside digital integration, and incentives for export-oriented manufacturing capacity – make it a stronger trade partner to the EU than even a decade prior. Meanwhile Brexit and shifting geopolitical realities have hastened EU interest in the timely culmination of a constructive trade deal.

Sector-wise opportunities under India-EU trade pact

The India-EU FTA could boost market prospects for domestic industries, such as textiles, leather, and sports goods, for export-oriented production targeting the EU market.

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