In the midst of Trump’s pricing threats, India-EU FTA presents crucial economic opportunities | UPSC News Current Affairs

Last month, the president of the European Commission Ursula von der Leyen, accompanied by members of the college of European commissioners, visited India and had discussions at the level of the delegation with Prime Minister Narendra Modi. The two leaders ordered their teams to finalize the FTA by the end of this year. Between March 10 and March 14, the two parties held the 10th round of talks in Brussels aimed at resolving the remaining question to finalize the agreement.

The ALE could be an important breakthrough before the probable summit of India-EU later this year. Most experts believe that this could considerably improve trade and investment between India and the EU. The Indian government said that during the year 2024, the bilateral trade in goods and services totaled around 190 billion dollars, India exporting $ 106 billion and significant more than $ 82 billion.

According to Indian data, since 2000, EU companies have invested around $ 118 billion in India, representing around 17% of the total IDE entries. This has exceeded combined investments in the United States, Japan, China and Russia. About 6,000 EU companies operate in the country. However, the precise follow -up of IDEs is difficult, because almost half of the entries for India pass via Maurice and Singapore, which serve as key investment channels for foreign companies. Indian companies have also invested around $ 40 billion in the EU in the past 25 years.

Fta part of a broader strategic partnership in India-EU

ALE negotiations are part of the wider India-EU strategic partnership established in 2004. The heart of this partnership has always been commercial and investment links. Unlike other areas of intergovernmental cooperation – such as foreign policy, internal security and migration – where the EU mainly coordinates and facilitates collaboration between Member States, trade is the exclusive jurisdiction of the EU.

Following the recommendations of the high -level commercial group established under the 2005 joint action plan, negotiations began in 2007 under the bilateral commercial and investment agreement (BTIA). At the time, the United Kingdom was still a member of the EU. The complete agenda covered the trade in goods and services, investments, public procurement, technical regulations, intellectual property rights, geographic indications, competition policy and dispute resolution.

At the beginning, there was a strong enthusiasm because the Indian economy worked well, and European leaders were confident after the enlargement of the EU and the introduction of the single currency. Despite certain disagreements in cars, wines and spirits, dairy products and the circulation of professionals, it seems that negotiations on goods and services were reasonably close. Unresolved problems also included data security and public procurement.

During the ninth summit of India-EU in France in 2008, the Indian Prime Minister of the time, Manmohan Singh, and EU leaders announced his intention to finalize the agreement by 2009. However, the momentum has slowed down quickly while European decision-makers began to focus on the fight against financial crises in certain European economies, while India was confronted with political paralysis. Despite this, during the 2010 EU-India summit in Brussels, the two parties established a new deadline for spring 2011. After several missed deadlines and 12 cycles of official negotiations, the talks were finally frozen in 2013 due to a “level of ambition level”.

PM Modi brings the EU back to the agenda of India Foreign Policy

When Narendra Modi became Prime Minister, there were great expectations that an India-EU trade agreement could become a reality, given the emphasis on economic issues in foreign policy. He also visited several European capitals. Through the summit of India-EU 2016 and Agenda for Action 2020, He brought the EU to the agenda of India’s foreign policy.

However, no progress has been made on the bilateral trade agreement. With stagnant exports and the manufacture of evil to take off, India has been cautious about commercial offers and has refrained from signing new major agreements. In the meantime, New Delhi has also ended bilateral investment treaties with a large number of countries, including 22 EU member states.

The British EU (Brexit) and the Pandemic COVVI-19 exit created other complications. However, things started to change when Prime Minister Modi practically met the 27 EU leaders, as well as the presidents of the European Council and the European Commission, in May 2021. In addition to establishing a “connectivity partnership”, a key result of the summit was the agreement to restart commercial negotiations.

Instead of the BTIA, India and the EU decided to continue three parallel negotiations on the autonomous agreements covering trade, investment protection and geographic indications (GI). GI is attributed to products that have a specific geographical origin.

The time of the restart negotiations was useful because, after almost a decade of caution on trade agreements, India recently signed several agreements, notably those of Australia, Mauritius, the United Arab Emirates and the European Free Trade Trade Association (EFTA). Momentum is also built in commercial negotiations in India-Uk.

Key hedges in India-EU FTA

Meanwhile, India and the EU also launched the Trade and Technology Council (TTC), including three working groups: (1) Strategic technologies, digital governance and digital connectivity; (2) Green and clean energy technologies; and (3) Commercial channels, investment and resilient value. The EU only has one TTC with another country – the United States.

Since 2022, 10 new cycles of India-UE commercial negotiations have been completed with the next round scheduled for May 5 in New Delhi. Similarly, six cycles of negotiations took place on the protection of investments and the GI agreements. With the EU trade agreements covering 76 countries, India is faced with challenges in some of its exports.

The new Trump administration’s pricing threats against the EU and India also keep negotiators on both sides occupied with the United States at the moment. The main obstacles of India-EU FTA have been well known for years and include prices on agricultural products, wines and cars as well as market access problems. India is also pressure for greater mobility for qualified professionals.

The EU carbon border adjustment mechanism (CBAM) adds additional complexity to negotiations. Tackling additional prices on Indian steel, aluminum and cement exports under CBAM is now linked to ALE’s discussions. The EU also pleads for the provisions of travel, more, strict application, exclusive data and increased protection of patents.

Go beyond the protectionist state of mind

Regarding sustainability and work standards – a key request from the EU – the EFT agreement could serve as a model, where India has accepted these provisions without binding commitments. The question of public procurement was addressed in recent Indian agreements, such as that of water. For wines and agricultural products, India agreements with Australia and water could serve as reference points.

In the midst of global geopolitical fragmentation, tense transatlantic links and the European casualness strategy towards China, India-EU FTA presents an attractive opportunity for the EU. However, India is unlikely to considerably modify its position on data exclusivity, carbon tax, agricultural products and services. Consequently, the EU may have to be satisfied with a relatively shallow trade agreement rather than the complete agreement that it has continued for a long time.

However, the current geopolitical landscape has a strong opportunity for a significant compromise. This is aligned with the growing convergence of interests in Indo-Pacific and the stories surrounding the Economic corridor of the East Indian Europe (IMEC).

For India, the agreement could serve as a signal to the world that it goes beyond a protectionist state of mind. In addition, while India is advancing its ambitions for modernization, the EU will remain a crucial partner in trade, technology, investment and energy transition.

Publish reading questions

How have India-EU trade negotiations have progressed since 2007? What are the main obstacles in the finalization of the Indian-EU free trade agreement?

How did Prime Minister Narendra Moda bring the EU back to the agenda of India foreign policy?

In the midst of global geopolitical fragmentation, tense transatlantic links and the European casualness strategy towards China, India-EU FTA presents an attractive opportunity for the EU. Comment.

The India-EU free trade agreement could serve as a signal to the world that it goes beyond a protectionist state of mind. Discuss.

(Professor Gulshan Sachdeva is a chief coordinator, Dakshin – Center of South South World Excellence, Ris in New Delhi and professor of European studies at Jawaharlal Nehru University.)

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