India and EU Near Final Agreement on Free Trade Agreement, Focus on Non-Tariff Measures
Union Commerce Minister Piyush Goyal has announced significant progress in the negotiations for a Free Trade Agreement (FTA) between India and the European Union (EU) during his three-day official visit to Sweden. He stated that the two parties are “pretty close” to finalizing the agreement, with only non-tariff barriers remaining as a major issue. Goyal expressed optimism about resolving these barriers to facilitate smoother business operations between India and the EU.
Progress on Free Trade Agreement
During his visit, Goyal emphasized that more than half of the chapters in the FTA negotiations are ready, indicating that the discussions are advancing well. He noted that the content is nearly 90% complete regarding market access. The primary focus now is on addressing non-tariff barriers, which can complicate trade between the two regions. Goyal stated, “We are very much on track to achieve that (FTA). Significant progress has been made.” He highlighted the importance of making it easier for businesses to operate across borders, which is crucial for enhancing trade relations.
Challenges of Non-Tariff Barriers
Non-tariff barriers (NTBs) pose significant challenges for Indian exports to the EU, affecting various products such as chillies, tea, Basmati rice, and chemical products. These barriers often arise from domestic regulations aimed at protecting health and the environment but can become obstacles when they exceed scientific justification. Goyal pointed out that excessive regulation can lead to reciprocal actions that ultimately harm all parties involved. He expressed a commitment to deregulation and finding solutions to reduce the costs associated with these barriers, stating, “I am quite hopeful that we will find very robust solutions to this problem.”
Future Discussions and Trade Relations
The ongoing discussions also include topics such as services and rules of origin, which are essential for the FTA’s finalization. Goyal mentioned that EU Commissioner for Trade and Economic Security Maros Sefcovic is expected to visit New Delhi soon to further these negotiations. The minister also addressed the Carbon Border Adjustment Mechanism (CBAM), which he described as a non-tariff barrier that could negatively impact Indian industries. He warned that if the EU imposes such a carbon tax, India would need to respond accordingly. Goyal remains optimistic about reaching a positive outcome in these discussions.
Strengthening India-EU Trade Ties
India and the EU resumed FTA negotiations in June 2022 after an eight-year hiatus. In the fiscal year 2024-25, bilateral trade between India and the EU reached $136.4 billion, with Indian exports totaling $75.75 billion. The EU is India’s largest trading partner, accounting for about 17% of India’s total exports. Goyal’s visit also included meetings with Swedish business leaders, where he highlighted India’s investment potential and commitment to sustainable growth. With European companies having invested over $117 billion in India, the relationship between the two regions continues to strengthen, paving the way for future collaboration.
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