EAM Pushes for EU-India FTA

Syllabus: GS2/IR; GS3/Economy

Context

• India and Germany recently committed to doubling trade and expediting efforts to complete the India-European Union Free Trade Agreement (FTA) under negotiation.

About

• The German Foreign Minister was on a State visit to India.
• Both Indian and German Foreign Ministers discussed cooperation in semiconductors, student mobility, defence trade, and the India-EU Free Trade Agreement.
  • Both ministers underlined the importance of concluding negotiations for an India-EU free trade agreement within the target of the year-end.
• India’s Two Levels of Engagement
  • EU as a bloc: Regular summits, strategic dialogues on trade, tech, security, foreign policy.
  • Bilateral with major EU members: Deepening ties with France, Germany, Nordic and Eastern European countries.

India-EU Free Trade Agreement

• Negotiation Resumption: Talks resumed in 2022 after 8-years, talks stalled in 2013 due to market access disagreements.
• Objective: To finalize a comprehensive trade agreement covering goods, services, investments, and geographical indications.
• Negotiation Structure: The agreement will be concluded in two phases, following India’s phased approach used in previous FTAs (e.g., with Australia).
  • This is partly due to the volatile global trade environment, including US tariff actions.
• Prime Minister Narendra Modi and the European Commission President agreed to seal the deal by the end of this year.
• Key Focus Areas: 
  • Market Access: Duty cuts demanded by the EU in automobiles, medical devices, wines, spirits, meat, and poultry.
  • Services and Investments: The talks focused on areas like market access offers in goods, services, and investment.
  • Regulatory Aspects: Stronger Intellectual Property Rights (IPR) framework.
    • Agreements on sanitary and phytosanitary measures, technical barriers to trade, customs, government procurement, and sustainability.

India and Germany Bilateral Ties

• Establishment of Ties: India was among the first countries to establish diplomatic ties with Germany after the Second World War in 1951.
  • 2021 marked the 70th anniversary of the establishment of diplomatic relations.
• Strategic Partnership: Since 2000, India and Germany have had a ‘Strategic Partnership’ and 2025 marks the 25 years of Strategic Partnership. 
• Intergovernmental Consultations (IGC) in 2011: The IGC framework allows for a comprehensive review of cooperation and identification of new areas of engagement at the Cabinet level.
  • India is among a select group of countries with which Germany has such a dialogue mechanism.
• Defence Cooperation: Bilateral Defence Cooperation Agreement was signed in 2006 and provides the framework for bilateral defence ties.
  • Germany Participated in many multilateral exercises with India, such as: MILAN, PASSEX, EX TARANG SHAKTI-1.
• Trade Cooperation: Indo-German bilateral trade touched an all-time high of US$ 33.40 billion with exports from India at US$ 15.09 billion and imports to India from Germany at US$ 18.31 billion in 2024. 
  • India was Germany’s 23rd largest trading partner in 2024 and Germany was the 8th largest trading partner for India in and is India’s largest trading partner in the EU.
• Development Partnership: Germany is one of India’s biggest development partners (≈€24 billion committed).
  • Green and Sustainable Development Partnership (2022): Germany pledged €10 billion by 2030.
  • Collaboration in renewable energy, metro projects, green corridors, and smart cities directly aids India’s climate goals and SDG commitments.
• Multilateral Cooperation: 
  • Support for India’s permanent seat at UNSC.
  • Coordination at G20, UN, WTO, COP climate talks.
  • Both emphasize rules-based international order and Indo-Pacific security.
• Indian Diaspora: There are around 2.46 lakh (2023) Indian passport holders and Indian-origin people in Germany.
  • The Indian diaspora mainly consists of professionals, researchers and scientists, businessmen, nurses and students. 

Conclusion

• Germany is significant for India as a gateway to Europe, a leader in green technology and innovation, and a partner in shaping a multipolar, sustainable world order. 
• The relationship complements India’s priorities in economic modernization, climate action, skill mobility, and strategic security.

Source: TH