India-EU FTA talks

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    • Recently, India and the European Union concluded the first round of negotiations for India-EU Trade and Investment Agreements, including the Geographical Indicators (GI) and the next round of talks is scheduled at Brussels.

    Major highlights

    • During the first round: 52 technical sessions covering 18 policy areas of FTA and seven sessions on investment protection and GIs were held.
    • Trade negotiations: Both sides are aiming for the trade negotiations to be broad-based, balanced, and comprehensive, based on the principles of fairness and reciprocity.
    • Trade: India’s bilateral trade with the EU amounted to $116.36 billion in 2021-22.
      • At present, the EU is India’s second largest trading partner after the US, and the second largest destination for Indian exports.

    Significance of the India-EU FTA

    • The trade deal will help to diversify and secure the supply chains, boost economic opportunities for our businesses, and bring significant benefits to the people.
    • FTA will strengthen India’s attempts to harness its growing domestic economy and middle class to support its rise as a global economic power.
    • Political terms
      • From the EU’s perspective the free trade agreement (FTA) with India will support the EU’s aim of employing FTAs to foster partner countries’ integration into the world economy, and will strengthen its role in global trade governance.
      • From India’s perspective, it will boost the “Make in India” campaign and the ambition to establish India as a regional leader and global manufacturing centre.
    • A well-negotiated agreement will boost trade and investment flows between the two regions. The EU is India’s main source of technology transfer.

    Challenges/ Issues in India-EU FTA

    • It is not clear whether it will cover only trade in goods, or cover deeper forms of integration such as investment and competition policy.
    • India will be a net loser from the FTA in terms of the trade in goods: primarily as a result of the loss of revenues from lower or zero tariffs, although gains are expected from liberalisation of the services sector.
    • The EU and India have even had trade disputes at the World Trade Organisation (WTO) on wine and spirits and on pharmaceuticals.
    • India has also been affected by EU regulations and standards, especially on agricultural exports.
    • Data-secure country: At present, India is not considered data-secure under EU legislation, despite India amending its Information Technology Act in 2000 and issuing new Information Technology Rules in 2011, in line with the “safe harbour” principles adopted by the United States.

    Way forward

    • Resuming trade negotiations could be a good move for India as the EU is India’s first trading partner and the benefits might thus be easier to reap given the trade volume.
    • The deal could strengthen India and the EU’s global standing but can also provide an opportunity to further integrate their partnership on various shared goals like green economy, sustainable development, and resource efficiency.

    India-EU Relations

    • India-EU bilateral relations date back to the early 1960s with India being amongst the first countries to establish diplomatic relations with the European Economic Community in 1962.
    • The first India-EU Summit took place in Lisbon in June 2000 and marked a watershed in the evolution of the relationship.
    • In 2007 India and the EU began negotiations on a broad-based Bilateral Trade and Investment Agreement (BTIA) in Brussels, Belgium.
    • As the world’s two largest democracies, the EU and India share a commitment to protecting and promoting human rights, a rules-based global order, effective multilateralism, sustainable development and open trade. 
      • In 2022, the EU and India celebrate 60 years of bilateral relations.

    Source:IE