India and EU Accelerate Efforts Toward Free Trade Agreement

India and the EU are progressing towards a free trade agreement, with discussions led by Minister Piyush Goyal and Commissioner Maros Sefcovic. The FTA aims to conclude by year-end, responding to U.S. tariff threats. Bilateral trade and investment figures highlight the significance of this partnership, which includes additional agreements on investment protection and geographical indications.

On March 1, 2025, Indian Commerce and Industry Minister Piyush Goyal and EU Commissioner for Trade and Economic Security Maros Sefcovic convened in Mumbai to advance discussions on a long-awaited free trade agreement (FTA). Both parties seek to conclude the FTA by the end of the year, motivated by the need for a balanced and mutually beneficial trade framework. Mr. Goyal expressed optimism about enhancing economic ties, aiming for a prosperous partnership between India and the European Union.

The urgency for finalizing the agreement arises against the backdrop of U.S. tariffs under President Donald Trump’s administration. Prime Minister Narendra Modi and European Commission President Ursula von der Leyen recently reaffirmed their commitment to securing the FTA by this year, particularly in response to the growing uncertainties in the global economy. In the upcoming days, the two sides are scheduled to engage in the tenth round of negotiations in Brussels from March 10-14, 2025.

Since restarting negotiations in June 2022, after an eight-year hiatus, both India and the EU have been addressing key issues that previously stalled talks. While the EU demands significant reductions in import duties for automobiles and alcoholic beverages, India aims to secure data security status for its IT sector. This request is critical for facilitating the secure flow of sensitive information essential for India’s thriving IT industry.

In terms of trade volume, India and the EU are significant partners, with bilateral goods trade reaching $137.41 billion in 2023-2024. Indian exports to the EU consist of textiles, pharmaceuticals, steel, and machinery, which would become more competitive through the agreement. Furthermore, investment between both parties shows substantial figures, with the EU investing over $117 billion in India and India’s investments in the EU totaling around $40 billion.

Overall, the proposed FTA aims to enhance trade relations and encourage further investments. The discussions also encompass an investment protection agreement and a geographical indications agreement, reflecting the comprehensive nature of the negotiations and their potential benefits for both economies.

In summary, India and the EU are actively pursuing a free trade agreement aimed at not only enhancing bilateral trade but also addressing mutual economic interests. The urgency of these discussions is heightened in light of shifting global trade dynamics and U.S. tariff policies. As negotiations progress, both parties remain focused on achieving a balanced and beneficial agreement that strengthens their economic partnership.

Original Source: www.thehindu.com