India-EU Free Trade Agreement (FTA)

The Free Trade Agreement (FTA) between India and the European Union (EU) is particularly significant due to the size of the economies involved and the demonstration of Indian negotiators' skills.

Key Features of the Agreement

• The EU will remove tariffs on 99.5% of items that India exports, with most tariffs dropping to zero upon implementation.
• India offers tariff concessions on 97.5% of European exports.

Important Negotiation Outcomes

• Both parties successfully resolved previously challenging issues:
   
  • Agriculture and Dairy: India excluded strategic agricultural and dairy sectors, while the EU excluded several sensitive agricultural sectors. 
  • Automobiles: A quota-based system protects India's domestic manufacturers and provides opportunities for Europe’s luxury carmakers.
  • Wine Tariffs: Quota-based tariffs meet demands from French winemakers while protecting India's domestic industry.

Additional Agreements

• Mobility, defense, and technology agreements were signed separately, signifying a mature approach to complex negotiations.

Concerns and Future Actions

• Carbon Border Adjustment Mechanism (CBAM): India could not negotiate concessions under CBAM, which currently applies to six products.
• India's ability to attract foreign investors depends on implementing reforms for large-scale manufacturing.
• The FTA document needs translation into 27 European languages before approval by each EU country and the European Parliament, potentially delaying implementation.

It is crucial that India ensures a swift clearance process to fully benefit from the agreement and counteract U.S. tariff challenges.