India-EU Free Trade Agreement (FTA) Negotiations
The discussions on the India-EU Free Trade Agreement have gained momentum following talks between Prime Minister Narendra Modi and European Union leaders. This is to expedite the deal amidst changing global trade dynamics.
EU Delegation Visit to India
- European Commissioner for Trade Maros Sefcovic and Commissioner for Agriculture Christophe Hansen are visiting India for negotiations.
- The delegation consists of a 30-member team from Brussels, engaging with Indian counterparts, Commerce Minister Piyush Goyal and Agriculture Minister Shivraj Singh Chouhan.
Trade and Tariffs Context
- The urgency in negotiations partially stems from tariff wars initiated by the Trump administration.
- The EU recently announced flexibilities for the US on the Carbon Border Adjustment Mechanism (CBAM), leading India to seek similar concessions.
- The CBAM is set to impact Indian industries starting January 1, 2026, with compliance costs rising for MSMEs.
- India's steel and aluminium shipments to the EU saw a decrease of 24.4% in FY25.
Progress and Challenges in FTA Negotiations
- Out of 27 chapters, 11 have been concluded, covering areas like intellectual property rights, digital trade, and competition.
- The digital trade chapter is pivotal for India’s service sector, focusing on cross-border data flow and digital services.
- Challenges remain in areas like sanitary and phytosanitary issues, agriculture, and specific sectors like whisky and automobiles.
- Agriculture is particularly contentious, with agreements to exclude dairy, sugar, and rice from negotiations.
Strategic Importance and Economic Relations
- The push for a deal by year-end aligns with the upcoming India-EU leaders' summit.
- The EU, as a significant trading partner, accounted for €124 billion of trade in goods with India in 2023.
- Trade in services between the EU and India reached €59.7 billion in 2023.
- The EU is also negotiating trade deals with other countries, including Indonesia, Malaysia, Philippines, and UAE.