Under the carbon border adjustment mechanism (CBAM), Indian steel, aluminum and cement exports to the EU could cope with prices of 20 to 35%, even if an ALE is signed, said the Research Initiative on World Trade (GTRI) in its report.
This raises concerns that if EU’s property would enter Indian Dr. Indian exports would still be confronted with these indirect obstacles in Europe, he added.
India and the European Union block of 27 countries (EU) will begin the tenth series of negotiations for a free trade agreement offered Monday in Brussels.
The founder of GTRI, Ajay Srivastava, said that India was pressure for clear exemptions or compensatory measures within the ALE to neutralize the impact of the CBAM and related environmental rules.
“Without such provisions, India fears that EU climatic policies can act as disguised trade barriers, limiting its ability to export to Europe. One of the largest obstacles of negotiations is the aggressive EU environmental regulations,” he said. In the service sector, the report indicates that the EU imposes restrictions on the provision of remote online services (Mode 1) by forcing Indian companies to establish local offices and to maintain high minimum wage thresholds for Indian professionals working in Europe. These requirements undermine the very objective of digital trade, which makes it more difficult for Indian IT companies to offer their services at a distance, he said that the addition of a long-standing request from India is that the EU recognizes it as a “secure data country” under the General Data Protection Regulations (RGPD).
Without this status, Indian companies manipulating the data of EU citizens face additional costs of compliance and legal obstacles, unlike countries like Japan or South Korea, which benefit from transparent data transfers.
“The EU exhorts India to adopt stronger confidentiality regulations aligned on the GDPR, but India considers this as a unnecessary burden for its digital economy. India has just promulgated its digital law on the protection of personal data, 2023, which, according to her, should be sufficient, although it does not meet all EU standards,” said Srivastava.
In the chapter of the services of the agreement, India has also called for easier commercial visas (Mode 4) for its professionals going to the EU for short -term assignments.
On the other hand, European companies are looking for better access to the banking, legal, accounting, audit and financial services of India.
The EU wants India to open these markets to European companies.
India is also looking for recognition of professional qualifications through mutual recognition agreements (ARM). This would allow Indian professionals in fields such as medicine, engineering and accounting to operate more easily in EU countries, which the EU was slow, he said.
In addition, the EU puts pressure for the access to the lucrative market for government purchases (GP) in India, allowing European companies to compete in contracts in the central and public sector (PSU) companies in India.
“However, India is unlikely to accept this request, given that the EU shopping market is largely closed to external companies. India may not accept EU demands, because public procurement is a major political support for small businesses, in particular in sectors such as infrastructure, defense and public services,” said the report.
In investment negotiations, while India has proposed its model of bilateral investment treaty (ILO) as a framework, the EU wants India to soften its investment protection clauses to align with European expectations.
India may not want to dilute beyond its model, which is designed to protect India’s regulatory autonomy and prevent excessive legal demands from foreign investors, he added.
The report indicates that the EU demands that India will make binding commitments to labor rights, environmental sustainability and data protection. India, however, prefers a most effective approach, arguing that the imposition of rigid sustainability obligations could interfere with its internal laws and policies.
European negotiators insist on the fact that India aligns its laws on work on international standards, in particular in fields such as collective negotiation, safety of the workplace and wages, he said that they also wanted India to strictly commit to environmental standards within the framework of the ALE.
“Intellectual property (IP) remains another area of disagreement. The EU obliges India to accept travel provisions, which go beyond the intellectual property rights of the WTO,” he said.
The GTRI said that the EU wanted stronger application mechanisms, exclusivity of prolonged data for pharmaceutical companies and strict patent protection rules.
“India, however, is resistant to these requirements, as they could make vital drugs more expensive and restrict the flourishing generic drug industry from India, which provides affordable drugs to the world,” he added.
In the field of geographic indications (GIS), the EU asks India to bypass its normal GI registration process for certain European products, granting them automatic recognition, according to the report.
This would give products like champagne, Roquefort cheese and prosciutto di Parma (a dry Italian ham) Immediate GI protection in India without undergoing the standard verification process, he said.
“India insists that the EU follows Indian legal procedures for the recording of GIS, as well as Indian products such as Darjeeling Tea, Basmati Rice and Alphonso Mangoes undergo a thorough examination before receiving gastrointestinal status in Europe,” he added.
The India-EU agreement has the potential to considerably stimulate trade and investment between the two partners.
The EU, with a GDP of 18.4 USD Billions and a population of 448 million inhabitants, is a major world commercial player, exporting more than 2.9 USD and important more than 2.6 billions of dollars per year.
India, with an economy of 3.9 USD billions and a population of 1.4 billion inhabitants, exported $ 437 billion into goods and imported $ 678 billion in 201024.
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