Amid ongoing concerns over a potential tariff war, India and the European Union (EU) have reaffirmed their commitment to swiftly conclude a free trade agreement (FTA) by the end of the year. Additionally, both parties plan to collaborate on various initiatives, including the development of the India-Middle East-Europe Economic Corridor (IMEC). These discussions took place during a meeting between Indian Prime Minister Narendra Modi and European Commission President Ursula von der Leyen on Friday.
“Prime Minister Modi and President von der Leyen emphasized the significant benefits that the strategic partnership between India and the EU has brought to their nations and the global good. They pledged to elevate this partnership further, building on 20 years of strategic collaboration and over 30 years of India-EU cooperation agreements,” stated a joint declaration following von der Leyen’s visit to India on February 27 and 28.
India and the EU are set to commence the tenth round of negotiations from March 10 to 14 in Brussels. The leaders have tasked their respective negotiating teams with finalizing a balanced, ambitious, and mutually beneficial FTA by the end of the year. The agreement aims to strengthen trade and economic relations, enhance market access, and eliminate business barriers. Additionally, discussions on an Investment Protection Agreement and a Geographic Indications Agreement are also set to advance.
The push to conclude the India-EU FTA this year is particularly significant, given that negotiations have been ongoing for several years. The current round of FTA talks was relaunched in June 2022. The EU is India’s largest trading partner, with bilateral trade exceeding $137.5 billion in FY2023-24. A recent report by the Global Trade Research Initiative highlighted the strong growth potential of this partnership, underscoring the need for a swift conclusion of the FTA to unlock further benefits.
Key points in the negotiations include the EU’s demands for reduced tariffs on wines, spirits, and automobiles, as well as greater access to agricultural goods. An EU official noted a “strong commitment from the Indian side to address tariffs on cars, wines, spirits, public procurement, and various non-tariff barriers.” Meanwhile, India has called for a review of the EU’s carbon border tax, particularly as it affects industries like steel, cement, and aluminum.
