Indian Team Departs for Brussels to Accelerate Free Trade Agreement with EU
India’s Delegation Heads to Brussels to Propel FTA Discussions with the EU
In a bid to expedite negotiations for a Free Trade Agreement (FTA) with the European Union, a contingent from India’s Ministry of Commerce departed for Brussels late Tuesday, continuing discussions from where they had previously left off last week. This visit, led by the chief negotiator for the India-EU FTA, comes shortly after the conclusion of the 11th round of talks held in New Delhi from May 12 to May 16.
Focus on 2025 Deadline and Phased Agreements
With a goal to finalize the FTA by the end of 2025, both parties are exploring the option of rolling out the agreement in phases. The recent completion of the full-scale FTA negotiations with the UK has energized India’s efforts to secure multiple trade agreements within this year. Currently, Commerce and Industry Minister Piyush Goyal, along with Indian negotiators, is working in Washington to expedite the India-US Bilateral Trade Agreement (BTA).
Negotiations on Trade Liberalization
The phased approach to negotiations aims to facilitate quicker implementation of trade liberalization in sectors with fewer discrepancies, allowing more complex issues to be addressed in subsequent phases. To support the India-EU talks, Minister Goyal had already visited Brussels earlier in the month to meet with Maros Sefcovic, the European Commission’s Commissioner for Trade and Economic Security. Their discussions involved market access improvements and strategies to minimize Non-Tariff Barriers (NTBs).
Key Aspects of the India-EU FTA
Negotiations for the FTA commenced in June 2022 and encompass 23 chapters covering various policy areas. Fundamental chapters focus on trade in goods and services, rules of origin, customs regulations, technical barriers to trade, trade remedies, and dispute resolution. Additionally, the agreement will also encompass government procurement, intellectual property rights, competition frameworks, merger controls, and transparency protocols, among others, to be addressed in later stages.
Targeting Tariffs and Market Access
In the 10th negotiation round, for the first time, sector-specific sessions concentrated on industries like automobiles and medical devices, addressing tariff-related issues and rules of origin. A significant demand from India in these discussions has been for zero tariffs on labor-intensive exports and improved access to the EU’s service market. Conversely, the EU is advocating for India to lower tariffs on cheese and skimmed milk powder—products currently protected by substantial import duties intended to safeguard the domestic dairy sector. Indian authorities have expressed reluctance to concede on dairy matters in any FTAs, having excluded dairy negotiations from the UK FTA as well.
European Winemakers and Automakers Push for Market Access
Furthermore, European winemakers are advocating for increased access to the Indian market, noting that imported wines are currently subject to a staggering 150% tariff. The EU aspires for India to either eliminate or significantly reduce these tariffs to levels between 30-40%. India is considering aligning its tariffs with those offered to Australia under the ECTA, which allowed a reduction of Australian wine tariffs to 50% over a ten-year period, as reported by GTRI.
Automotive Sector Dynamics
Similarly, European automotive manufacturers are requesting that India decrease import duties on completely built-up (CBU) vehicles to a range of 10-20% from the current 70%. The EU already exports over $2 billion in automobiles and auto parts to India each year, mostly in completely knocked-down (CKD) form, which incurs a 15% tariff upon local assembly.
Trade Relationship with the EU
The EU is a significant trading partner for India. During the fiscal year from April to February, India exported goods worth $69 billion to the EU while importing $54.6 billion from the region.
