India and the European Union (EU) will resume negotiations next week for a proposed free trade agreement after a gap of nine years. The talks are expected to result in a pact that will catalyse investments from the 27 EU countries into India, commerce and industry minister Piyush Goyal said on Monday. The proposed agreement will also give boosts to exports of pharmaceuticals, textiles, agricultural, leather and handloom products, Goyal said. “We will get access to high end technologies from 27 EU countries while our services sector will gain from this trade agreement,” Goyal said.
The resumption of the negotiations, from June 27, were finalised in Brussels last week after a meeting between Goyal and European Commission’s executive vice president Valdis Dombrovskis. Both the sides will launch a stand-alone Investment Protection Agreement (IPA) and the Geographical Indicators (GIs) Agreement.
IPA aims at providing a legal framework for cross-border investments to enhance the confidence of investors, while the GI pact is expected to provide a common regulatory environment in facilitating trade of GI tagged products, including agricultural, food and handicrafts.
In India, there are 417 registered GI products such as Darjeeling tea, Basmati rice, Kanchipuram silk etc, which possess qualities or a reputation due to their geographical origins.
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 sides have now decided to take the negotiations to a logical conclusion.
The EU, even after 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, India and the EU 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.