By negotiating the FTA in two phases, both sides can first close the area where they can reach an agreement. Complex issues can be addressed at a later stage.
“Tranche FTAs are being explored in the EU,” officials said.
Both sides concluded their 10th negotiations in Brussels last month due to the proposed agreement. The next lecture is scheduled for May.
Officials added that talks are moving in a positive direction and momentum is being built after European Commission’s Ursula von der Leyen visited with the EU Commission or the bloc’s senior political leader.
According to trade experts, strengthening the economic ties between the two regions is important in light of the high tariffs imposed by US President Donald Trump on April 3, and in June 2022, India and the 27 EU bloc resumed negotiations after a gap of more than eight years. It stagnated in 2013 due to differences in market openness levels. On February 28, Prime Minister Narendra Modi and President of the European Commission agreed to seal the much-anticipated free trade agreement by this year.
India-EU Trade Agreement negotiations cover 23 policy areas or chapters including trade in goods, trade in services, investment, sanitation and plant inspection measures, trade, trade remedies, rules of origin, promotion of customs and trade, competition, trade defense, government procurement, dispute resolution, intellectual property rights, geographical insights, and sustainable development.
In addition to demanding significant mandatory cuts for automobiles and medical devices, the EU wants tax cuts for wine, spirit and a strong intellectual property regime.
Exporting Indian goods to the EU, including ready-made clothing, medicines, steel, petroleum products, electrical machinery, etc., is more competitive if the agreement is concluded normally.
India’s bilateral trade with the EU was USD 1374.1 billion (exports USD 759.2 billion and imports USD 614.8 billion) in 2023-24, making it India’s largest trading partner.
The EU market accounts for around 17% of India’s total exports, while the EU’s exports to India account for 9% of total exports.
Additionally, two-way trade in services between India and the EU in 2023 was estimated at US$514.5 billion.
The agreement is intended to further increase bilateral trade and investment between the two. The two sides are negotiating free trade agreements, investment protection agreements and geographic adaptation agreements (GIS).
Furthermore, in addition to implementing a free trade agreement between India and the four European bloc EFTA, officials said the parliament of all four European countries have resolved the agreement.
In Switzerland, a referendum is required to ratify the agreement.
Both sides aim to implement the agreement by the end of this year.
Members of the European Free Trade Association (EFTA) are Iceland, Liechtenstein, Norway and Switzerland.
Both sides signed the Trade and Economic Partnership Agreement (TEPA) on March 10, 2024. Under the agreement, India received an investment commitment of USD 100 billion over the course of 15 years from grouping, allowing several products, including Swiss watches, chocolates, and cutting and polishing diamonds in low or zero duties.
