The EU is India’s largest trading partner with a 12.5% of overall trade in the years 2015 and 2016 which is more than China and the United States. The relationship between EU and India dates back to 1994 and is defined by the EU-India Cooperation Agreement.
India is EU’s 9th largest trading partner; in fact, the bilateral trade reached €115 billion in 2017. The country is among the few nations in the world that run a surplus in services trade with the EU and the investment stocks from Europe to India reached €51.2 billion in 2015. As a matter of fact, France, Germany and UK collectively represent the major part of EU-India trade.
On 28th January 2007, India and EU began negotiations on a Broad-Based Trade and Investment agreement (BTIA) in Brussels. India and the EU expected to promote bilateral trade by eliminating the barriers to trade in goods and services and investment across all the sectors of the economy. Both the parties believed that a comprehensive and a goal-oriented agreement which is consistent with WTO rules and principles would open new markets and expand the opportunities for Indian and EU businesses.
The negotiations covered Trade in Goods and Services, Investment, Technical Barriers to Trade, Trade Remedies, Rules of Origin, Customs and Trade Facilitation, Competition, Trade Defense, Government Procurement, Dispute Settlement, Intellectual Property Rights & Geographical Indications, Sustainable Development but India’s regulatory policies and trade regimes remained comparatively restrictive. Several rounds of negotiations were completed without reaching to the goal of a Free Trade Agreement and later in 2013 the talks were repudiated
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Few days back, an important virtual exchange of dialogues regarding trade and investment in India-EU summit was set up which dealt with BTIA. India’s Prime Minister Narendra Modi held talks with the European Council President Charles Michel and European Commission President Ursula Von der Leyen via video-conferencing in which they decided to commit to a framework for strategic cooperation until 2025 in which a joint political statement was issued which is a five-year roadmap for the India-E.U. strategic partnership, a civil nuclear research and development cooperation agreement between EURATOM and the Department of Atomic Energy.
India is looking forward to a major reset of its FTA which includes exiting those that have hurt the domestic industry. There has been a widening picture among policymakers that the FTAs signed by India have not bought the expected tangible benefits and also have hurt the country’s manufacturing sector. There has been a reinvigorating focus on trade deals with the US, the European Union and the UK who are the major markets for Indian exporters.
The government has set up four working groups to assess the trade agreements and laid out a new strategy for them while taking into account the geo-political changes keeping in mind the Covid-19 outbreak. Fresh talks are expected to focus on industrial goods, agricultural tariffs and services, access to each other’s markets for goods and services, the framework for investment, rules on intellectual property and competition and commitments on sustainable development issues such as environmental, social, and labor rights. The inter-ministerial groups that include the finance, commerce & industry and external affairs ministries will frame out a comprehensive plan.
The free trade agreement (FTA) with India as an emerging economy will support the EU’s goal of employing FTAs to foster partner countries’ integration into the world economy and not only will it strengthen its role in global trade governance, it will also boost “Make in India” campaign and Narendra Modi’s ambition to establish India as a global manufacturing center. Furthermore, the FTA will also strengthen India’s attempts to tackle its growing economy and middle class to support its rise as a global economic power. Although there is no official framework as to how India and EU will move forward with the FTA but it will be a great change to look at.
Written by Virtika Choudhry
Reference Links:
www.economictimes.indiatimes.com/news/economy/foreign-trade/with-renewed-focus-on-us-eu-and-uk-india-looks-to-reset-ftas-exit-fruitless-deals/articleshow/77186728.cms
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