After a gap of about nine years, India and the EU will likely resume the much-awaited negotiations for a proposed free trade agreement (FTA) from June 27, as both the sides eye a deal by next fiscal, sources told FE.
Before the negotiations begin, commerce and industry minister Piyush Goyal may visit Brussels later this month — either ahead of the next ministerial of the World Trade Organization starting June 12, or after that — to set the stage for the talks, one of the sources said. “The EU team will visit India after that to formally resume the negotiations,” he added.
Sources last week said both the sides would first take stock of the progress made so far and discuss how to proceed further. “It makes sense to focus on points of convergence first before moving on to the contentious matters,” one of the sources had said.
Formal negotiations between the two sides for the FTA were stuck over stark differences after 16 rounds of talks between 2007 and 2013. The EU insisted that India scrap or slash hefty import duties on sensitive products such as automobiles, alcoholic beverages and dairy products, and open up legal services.
Similarly, India’s demand included greater access to the EU market for its skilled professionals, among others. However, both the sides have now decided to take the negotiations to their logical conclusion.
The EU, even after the Brexit, continued to be India’s largest export destination (as a bloc) in FY22, although it has lost some appeal. The country’s outbound shipments to the EU jumped 57% on-year in FY22 to $65 billion, albeit on a contracted base. Similarly, its imports from the EU jumped 29.4% last fiscal to $51.4 billion.
In April, the EU and India decided to set up a trade and technology council to boost bilateral ties, as the bloc’s president Ursula von der Leyen met Prime Minister Narendra Modi here. This move underscored growing co-operation between New Delhi and Brussels, as the US is the only other country that has a technical agreement with the EU, along the lines of the one signed with India now. The council is aimed at providing political-level oversight of the entire spectrum of the India-EU ties and to ensure closer coordination.
India signed an FTA with the UAE in February, New Delhi’s first such pact with any economy in a decade, and sealed another trade deal with Australia in April. Currently, it is also negotiating FTAs with the UK and Canada. The Gulf Cooperation Council, too, has evinced to sign an FTA with India.
The negotiations are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019.