Delhi and Brussels resumed negotiations, after a 2013 roadblock, for an ambitious free trade deal a week after a UK-India Enhanced Trade Partnership chalked out a new era for the two countries.
A planned resumption of dialogue between India and the European Union for a Free Trade Agreement (FTA) is welcome news after a hiatus of eight years – and comes at a time when the Indian External Affairs Minister held bilateral discussions with his UK counterpart to pave the way for their own FTA.
According to officials, India and the European Union are set to resume negotiations for an ambitious and comprehensive free trade agreement, and an announcement on the formal resumption is expected to be made at a virtual summit between Indian Prime Minister Narendra Modi and top leadership of the 27-nation grouping on Saturday.
The EU is not only India’s largest trading partner – accounting for €80 billion worth of trade in goods in 2019 or 11.1% of total Indian trade – but also trade in goods between the EU and India increased by 72% in the last decade. The EU's share in foreign investment inflows to India more than doubled from 8% to 18% in the last decade, making the EU the first foreign investor in India.
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EU officials told PTI that the proposed free trade agreement package with India will include an investment protection pact as well as a framework on geographical indication. The two sides are also likely to announce a connectivity partnership at the summit that is aimed at boosting cooperation in sectors like railway, maritime and aviation as well as in the digital domain to bring people of the two sides closer to each other.
Launched in June 2007, the FTA talks between India and the EU hit a roadblock in May 2013 when the two sides failed to bridge substantial gaps on crucial issues, including tariff, data security status for the IT sector and market access. Prime Minister Modi was scheduled to visit Portugal for the India-EU summit but it was called off in view of the coronavirus crisis and both sides decided to hold the deliberations virtually.
In the 15th India-EU summit in July last year, PM Modi had pitched for bringing out an "action-oriented" agenda to further expand ties between the two sides. In that virtual summit, the two sides came out with a roadmap to further strengthen strategic partnership by 2025.
More than 6,000 European companies operate out of India, providing directly 1.7 million jobs and indirectly 5 million jobs in a broad range of sectors.
The developments come in the same week when Indian External Affairs Minister Dr S Jaishankar held bilateral discussions with his UK counterpart, Dominic Raab, focusing on both sides implementing an ambitious '2030 Roadmap' of the India-UK Enhanced Trade Partnership (ETP) to pave the way for an FTA.
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Dr Jaishankar said he and Raab also discussed Indo-Pacific cooperation and global health challenges in some detail. “Just concluded the bilateral Foreign Ministers' Meeting with British counterpart Dominic Raab. Focused on our responsibility for implementing the 2030 Roadmap. Confident that we will see early progress on many fronts,” he tweeted following his virtual interaction. “Also explored our strategic convergences across regions. Discussed the Indo-Pacific, global health challenges and UN cooperation in some detail,” he said.
Speaking during an exclusive interview with India Inc Group Chairman and CEO, Manoj Ladwa, he stated, “I actually sat in on the virtual summit between prime ministers Modi and Johnson. I think the new energy and thinking was visible as you listened in to the discussions. We had four big outcomes…a detailed roadmap. It’s almost like sector-by-sector - things you do across departments, domains and policies. On the economic front we have agreed to an Enhanced Trade Partnership, but the bottom line is there will be early decisions which will increase trade on both sides. I hope that we negotiate seriously and expeditiously a Free Trade Agreement (FTA) with the UK. It’s a very big step.”
Dr. Jaishankar spoke on a wide range of issues – the second wave of the pandemic which has hit India; the spotlight on India’s healthcare system; the efforts of Indians overseas, including the diaspora in the UK, who were mobilising assistance; India’s relationship with China - with questions pouring in from Indians at home and worldwide. The candid discussion was titled Does India Have A Plan? From Survival To Revival. It was a part of India Inc’s Global Dialogue Series and can be viewed here.
The bilateral meeting follows a Virtual Summit between UK Prime Minister Boris Johnson and Prime Minister Modi on Tuesday, when the two leaders agreed the '2030 Roadmap' as part of an ETP with trade and investment deals worth around GBP 1 billion.
The ETP, signed between Commerce and Industry Minister Piyush Goyal and UK International Trade Secretary Liz Truss soon after, sets the goal for FTA talks to kick-start within months. The roadmap will pave the way for a deeper and stronger engagement over the next ten years in the key areas of people to people contacts, trade and economy, defence and security, climate action and health. Modi and Johnson launched the ETP to unleash the trade potential between the world’s fifth and sixth largest economies, and by setting an ambitious target of more than doubling bilateral trade by 2030.