India and EU Wrap Up 11th Round of FTA Negotiations, Potential Agreement on the Horizon

India and the European Union have successfully wrapped up the 11th round of negotiations for their proposed Free Trade Agreement (FTA), adopting a two-stage approach to finalize the deal. This decision comes amid increasing global trade uncertainties, particularly influenced by U.S. tariff policies. The negotiations, which concluded on May 16, focus on critical areas such as market access for goods, services, and investment, with both parties aiming to enhance trade relations.

Phased Approach to Negotiations

The latest round of talks reflects a strategic shift towards a phased approach, similar to India’s previous trade agreements with Australia and ongoing discussions with the United States. Commerce Secretary Sunil Barthwal emphasized the importance of prioritizing core trade issues, stating, “If some of the issues which may not be very core to the trade may take some more time, then it is better to focus on core trade issues.” This strategy aims to expedite discussions on essential topics while allowing for more complex issues to be addressed later. The negotiators are also exploring potential early harvest opportunities, which would allow for quicker agreements on specific trade aspects.

Key Areas of Focus

During the negotiations, the EU has pushed for significant tariff reductions on various products, including automobiles, medical devices, wines, spirits, meat, and poultry. Additionally, there is a strong emphasis on enhancing intellectual property protections. A successful FTA is expected to bolster India’s export competitiveness in sectors such as ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery. The ongoing discussions are critical for both parties, as they seek to strengthen economic ties and expand market access.

Trade Statistics and Future Commitments

In the fiscal year 2023-24, bilateral goods trade between the EU and India reached $137.41 billion, with Indian exports valued at $75.92 billion and imports at $61.48 billion. This makes the EU India’s largest trading partner in goods, accounting for approximately 17% of India’s total exports. Furthermore, exports from India represent about 9% of the EU’s total overseas sales. The commitment to finalize the FTA by the end of 2025 was reaffirmed by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen during a meeting on February 28.

Broader Negotiations Beyond the FTA

In addition to the FTA, discussions are ongoing regarding a bilateral investment protection agreement and the recognition of geographical indications (GIs). The negotiations encompass 23 policy areas, including trade in goods and services, investment protection, customs procedures, technical barriers, intellectual property rights, and sustainable development. The comprehensive nature of these talks highlights the importance both India and the EU place on strengthening their economic partnership in an increasingly complex global trade environment.

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