India-EU Free Trade Agreement (FTA):

Union Commerce and Industry Minister Piyush Goyal reaffirmed India's commitment to deepening economic ties with the European Union (EU) through the proposed India-EU Free Trade Agreement (FTA). Speaking at the India–Sweden High-Level Trade and Investment Policy Forum, he emphasised the significance of Indo-Swedish cooperation and India's potential as an investment destination.

India-EU Free Trade Agreement (FTA):

Background

• Negotiations started in 2007, suspended in 2013, and resumed in 2022.
• Targeted for conclusion by end of 2025.
• Aims to cover goods, services, investment protection, and geographical indications (GI).
• Expected to be India’s largest FTA till date.

Economic Significance

• Bilateral trade in 2023–24:
  • Goods: USD 41 billion
  • Services: USD 45 billion
• EU is:
  • Among India’s top 3 trading partners.
  • One of the largest FDI contributors to India.

Strategic Importance

• Counters trade barriers like rising US tariffs.
• Enables supply chain diversification and reduces dependency on China.
• Aligns with India’s strategic autonomy and EU’s Indo-Pacific vision.
• Supports India–EU cooperation in IMEEC, 6G, semiconductors, AI, and green hydrogen.

Key Areas Under Negotiation

• Market Access in Goods: Tariff reductions in apparel, auto, agriculture.
• Services Trade: Liberalization of IT services and mobility of professionals.
• Investment Protection Agreement: To ensure secure and transparent business environments.
• Geographical Indications (GI): Mutual recognition of unique regional products.
• Intellectual Property Rights (IPR): EU pushing for TRIPS-plus standards.

Key Benefits

• India
  • Tariff elimination will benefit Indian textiles, agri-exports, and processed foods.
  • Generic pharma to get faster regulatory approvals in EU.
  • IT services to gain better access and ease of mobility.
  • Boost to FDI in renewable energy, EVs, and infrastructure.
  • Job creation in MSMEs, manufacturing, and services.
  • Tech transfer and innovation due to stronger IPR framework.
• EU
  • Access to India’s large consumer market (1.4 billion population).
  • Improved investment security through investment protection mechanisms.
  • Entry into India’s digital economy—AI, fintech, and telecom.
  • Greater role in green energy sector—solar, wind, hydrogen.
  • Supply chain diversification in line with China +1
  • Scope for strategic cooperation in defence, space, and cybersecurity.

Challenges in Finalising the FTA

• Agriculture: India wary of EU demands to open market amidst EU subsidies.
• Data regulations: EU’s GDPR vs India’s evolving data protection laws.
• Carbon Border Adjustment Mechanism (CBAM): Affects Indian steel and aluminium exports.
• IPR concerns: EU demands stronger IPR protections; India cautious due to generic pharma interests.

Way Forward

• Balance trade liberalization with protection of domestic sectors.
• Negotiate flexible digital trade and data sharing norms.
• Address EU’s CBAM concerns through green technology cooperation.
• Use the FTA as a platform to deepen strategic partnerships across sectors.