New Delhi, March 1 – India and the European Union (EU) are accelerating negotiations to finalize a free trade agreement (FTA) by the end of this year, with officials from both sides meeting in Mumbai on Saturday to discuss key aspects of the deal.
The high-level meeting was led by India's Commerce and Industry Minister Piyush Goyal and EU Commissioner for Trade and Economic Security Maros Sefcovic, along with senior officials. The discussions focused on achieving a balanced and mutually beneficial trade pact.
"Our discussions focused on accelerating efforts towards a balanced and mutually beneficial free trade agreement. Looking forward to deepening economic ties and fostering a prosperous India-EU partnership," Goyal stated in a post on X.
Renewed Momentum Following Modi-Von der Leyen Agreement
The renewed urgency in the negotiations follows the February 28 meeting between Prime Minister Narendra Modi and European Commission President Ursula von der Leyen, where both leaders agreed to finalize the much-anticipated deal by year-end. This comes amid growing concerns over potential tariff hikes under a second-term Donald Trump administration in the U.S.With global trade uncertainties, securing a comprehensive trade agreement with the EU—India’s largest trading partner for goods—is seen as crucial. The next round of FTA negotiations, the tenth round, is scheduled to take place from March 10-14 in Brussels.
Key Negotiation Points
Negotiations between India and the 27-member EU bloc had initially stalled in 2013 due to disagreements over market access. Talks resumed in June 2022 after an eight-year hiatus.Key demands from the EU include:
- Significant tariff reductions on automobiles and wines and spirits.
- A stronger intellectual property rights (IPR) framework in India.
- Greater market access for sectors like textiles, pharmaceuticals, steel, petroleum products, and electrical machinery.
- Data security status for the IT sector, which would enable the free flow of sensitive information, boosting India's technology industry.
Trade and Investment Overview
India's bilateral trade in goods with the EU stood at USD 137.41 billion in 2023-24, with exports at USD 75.92 billion and imports at USD 61.48 billion. The EU accounts for 17% of India's total exports, while India represents 9% of the EU’s total exports.Additionally, bilateral trade in services between India and the EU was estimated at USD 51.45 billion in 2023.
On the investment front:
- EU investments in India total over USD 117 billion, with around 6,000 European companies operating in the country.
- Indian investments in the EU are valued at approximately USD 40 billion.
Potential Benefits of the Agreement
A successful trade agreement is expected to:- Enhance India's export competitiveness in the EU market.
- Boost EU investments in India, particularly in manufacturing and technology.
- Strengthen trade flows across multiple sectors, benefiting businesses on both sides.
With both India and the EU committed to concluding the deal by December 2024, the coming months will be crucial in determining the final contours of the agreement.
