Prospects for the EU-India trade deal
AHMEDABAD, India, Jan 12 (Reuters) – German Chancellor Friedrich Merz raised the possibility of the European Union and India signing a free trade agreement as soon as the end of the month, after meeting Indian Prime Minister Narendra Modi on Monday.
Current state of negotiations
The presidents of the European Commission and the European Council will visit India at the end of January to sign the agreement if it is finalized by then, Merz said during a visit to Ahmedabad, in western India.
Challenges and global context
“In any case, they will take another big step forward to ensure that this free trade agreement is achieved,” Merz said during his first trip to India since becoming chancellor.
Impact of protectionism
Negotiations were previously expected to conclude by the end of this year. However, according to German government sources, there is high expectation that a deal will be signed at the end of January after “very intensive” negotiations between Merz and Modi.
Safety and energy concerns
Indian Commerce Minister Piyush Goyal, speaking at another event in the western state of Gujarat, said a deal was almost in its final stages.
“REBIRTH OF UNFORTUNATE PROTECTIONISM”
Merz said the world was experiencing “a renaissance of unfortunate protectionism” that hurts Germany and India.
He did not name any countries. The United States has pressured India through tariffs to end its purchases of Russian oil and gas, which Washington and the European Union say are being used to finance the war in Ukraine.
Chinese export controls on minerals used in areas such as automobiles caused months of supply chain disruption last year due to the U.S.-China trade war, affecting German automakers.
Beijing also imposed restrictions on some semiconductors widely used in the auto industry after the Dutch government’s decision to take control of Chinese chipmaker Nexperia.
For the EU, signing a deal with India would follow the bloc’s deal with South America’s Mercosur group on Friday and mark a new step in building its own trade networks as the United States shakes up global trade and help reduce dependence on China.
In particular, Germany wants to work more closely on security issues with India to reduce the latter’s dependence on Russia, Merz said.
The countries signed a memorandum of understanding to this effect, as well as agreements on critical minerals, the health sector and an artificial intelligence innovation center.
“The MoUs signed today on all these issues will give new impetus and strength to our cooperation,” Modi said at a joint press conference with Merz.
India still works closely with Russia on security policy, and much of its military equipment is manufactured in Russia. It is also one of the largest buyers of Russian gas and oil, alongside China.
Germany is pressuring the Indian government to ensure that it prevents Indian companies from circumventing sanctions against Russia and reduces its energy imports from Russia – demands that India has so far rejected.
(Reporting by Andreas Rinke in Ahmedabad and Shivangi Acharya and Sakshi Dayal in New Delhi; Writing by Miranda Murray; Editing by Friederike Heine and Susan Fenton)
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