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Everything to Know About EU-India Free Trade Deals in Progress

On 17 June 2022, the European Union (a political and economical bloc of 27 countries) relaunched negotiations with India on Free Trade. Five Rounds of discussion has already happened and Sixth round is going to happen soon in August-2023. In this regards, we have attempted to compile all key information regarding Trade agreements and other related areas for the benefit of readers and students.


Components of Trade Negotiations

· Free Trade Agreement,

· Investment Protection Agreement

· Agreement on Geographical Indications (GIs).


Key Trade Statistics with EU

· EU is second largest export market for India after USA.

· The EU is India's third largest trading partner, accounting for €88 billion worth of trade in goods in 2021 or 10.8% of total Indian trade. India is the EU’s 10th largest trading partner, accounting for 2.1% of EU total trade in goods. Trade in services between the EU and India reached €30.4 billion in 2020.

· The EU's share in foreign investment stock in India reached €87.3 billion in 2020, up from €63.7 billion in 2017, making the EU a leading foreign investor in India.

· However, share of overall goods exports by India is declining.


Key Objectives of Trade Negotiations

  • It would not only reduce Duty on goods but also act as channel to bring down non-tariff barriers, thus helping firms on both sides – especially smaller ones – to export more;

  • The Geographical Indications Agreement, once concluded, will support rural communities and help preserve the cultural and culinary heritage of both sides. It will also assure simplified access to the quality products for consumers on both sides and promote the geographical indications globally.

  • Make sure the agreed rules are enforceable.

  • The investment protection negotiations aim to provide investors from both sides with a predictable and secure investment environment, through commitments on Non-discrimination; Protection against expropriation without compensation and unfair treatment of investors and their investments, while preserving the right to regulate, and Transfer of returns.

Mutual Beneficial Factors responsible for Trade Negotiation

  • Both India and EU consider China a non-transparent economy and are looking to cut Chinese Imports which have surged after Covid-19. At the same time Exports from both India and EU to China have remained stagnant.

  • Brexit is also one of the factors which are pushing EU for more Trade partners.

  • Moreover, India is pursuing closer integration with western economies after quitting the China dominated Regional Comprehensive Economic Partnership Negotiations. (RCEP).

  • Security of Supply Chain Management (China+1).

Challenges in Negotiation

  • A barrage of EU climate-related regulations, such as the Carbon Border Adjustment Mechanisms, Deforestation Regulation and Corporate Sustainability Due Diligence Directive will restrict Trade further.

  • Substantial differences exist in the standards followed by the EU and India particularly in major trade items such as drugs, electrical equipment and motor vehicles etc.

  • Harmonising compliance standards is crucial to boost exports.



Disclaimer: We have taken content for this article from various internet sources including news websites, original source etc for academic purpose.

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