India and the European Union (EU)

General Studies Paper-2

Context: India and the European Union (EU) chief negotiators have concluded another round of talks on the proposed free trade agreement (FTA) and agreed to reach a deal in two phases.

India-EU Free Trade Agreement (FTA) Negotiations Overview

• Negotiation Resumption: Talks resumed in June 2022 after an 8-year hiatus (stalled in 2013 due to market access disagreements).
• Objective: To finalize a comprehensive trade agreement covering goods, services, investments, and geographical indications.
• Negotiation Structure: The agreement will be concluded in two phases, following India’s phased approach used in previous FTAs (e.g., with Australia).
  • This is partly due to the volatile global trade environment, including US tariff actions.
• Prime Minister Narendra Modi and the European Commission President agreed to seal the deal by the end of this year.

Key Focus Areas

• Market Access: Duty cuts demanded by the EU in automobiles, medical devices, wines, spirits, meat, and poultry.
• Services and Investments: The talks focused on areas like market access offers in goods, services, and investment.
• Regulatory Aspects: Stronger Intellectual Property Rights (IPR) framework.
• Agreements on sanitary and phytosanitary measures, technical barriers to trade, customs, government procurement, and sustainability.

Potential Benefits

• Increased competitiveness for Indian exports like ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery.
• Stronger investment protection and clearer dispute settlement mechanisms.
• Enhanced bilateral cooperation in innovation and sustainable development.

India-EU relations

• Political cooperation: India-EU relations date to the early 1960s, and a cooperation agreement signed in 1994 took the bilateral relationship beyond trade and economic cooperation.
  • The first India-EU Summit, in 2000, marked a watershed in the evolution of the relationship.
  • At the 5th India-EU Summit at The Hague in 2004, the relationship was upgraded to a ‘Strategic Partnership’.
• Economic cooperation : India’s bilateral trade in goods with the EU was USD 137.41 billion in 2023-24, making it the largest trading partner of India for goods.
  • EU is India’s largest trading partner for goods, 17% of India’s exports go to the EU and 9% of EU exports come to India.
• Other areas of cooperation:
  • The India-EU Water Partnership (IEWP), established in 2016, aims to enhance technological, scientific, and policy frameworks in water management.
  • In 2020, there was an agreement for research and development cooperation in the peaceful uses of nuclear energy between the European Atomic Energy Community and the Government of India.
• India and the EU established the Trade and Technology Council (TTC) in 2023. The TTC is a forum for the two parties to collaborate on trade, technology, and security. The TTC’s goals.