India and the European Union have set a year-end deadline for a long-awaited free trade agreement, as announced by Prime Minister Narendra Modi and EU chief Ursula von der Leyen during their meeting in New Delhi. Both leaders emphasized the broadening of ties beyond trade, focusing on areas such as technology, investment, and security. Despite past stalled negotiations, which faced challenges over tariffs and visa restrictions, both sides are keen to finalize a deal. Additionally, discussions included the India-Middle East-Europe Corridor, aimed at enhancing connectivity for global trade. India-EU trade grew significantly, reaching $137 billion in 2023-24.
New Delhi:
India and the European Union have established a deadline of the end of this year to finalize a landmark free trade agreement that has been under negotiation for several years. This announcement was made in a joint statement by Prime Minister Narendra Modi and EU chief Ursula von der Leyen following their meeting in New Delhi aimed at enhancing India-EU relations.
In addition to discussions with the EU, India is engaging with various other countries, including the UK, to forge free trade agreements as the fastest-growing major economy seeks to bolster its trade connections. This initiative also coincides with efforts by the EU and many nations worldwide to mitigate the effects of tariffs implemented during Donald Trump’s administration.
This isn’t the first instance of India and the EU trying to establish a free trade agreement. An effort was made over ten years ago, but talks were halted in 2013. A subsequent attempt was initiated in 2021, and negotiations have continued since then, with both parties striving for favorable outcomes.
However, the relationship between India and the EU extends well beyond trade. At the joint press conference, PM Modi remarked, “We have crafted a blueprint for cooperation in trade, technology, investment, innovation, green growth, security, skill development, and mobility.”
He added that negotiators for the India-EU ties have been directed to complete the agreement by the year’s end. PM Modi also stated, “Today, we have committed to devise an ambitious roadmap for the India-EU partnership extending beyond 2025, which will be unveiled at the next India-EU summit.”
“We will collaborate on triangular development initiatives aimed at fostering sustainable and inclusive progress in the Indo-Pacific region and Africa,” PM Modi mentioned, underscoring the shared vision between India and the EU for a free and open Indo-Pacific region.
Describing the comprehensive India-EU agreement as “ambitious,” EU chief Ursula von der Leyen noted that discussions cover a range of topics from “green technology to pharmaceuticals, semiconductors to green hydrogen, and defense.”
She also referred to the Indian Ocean as the “lifeline for global trade,” asserting that its security is “crucial, not just for India but for the entire world.” Highlighting the need for a global security framework, the European Commission chief stated, “We should explore expanding our joint naval drills, building upon our successful operations in the Gulf of Guinea and the Red Sea.”
THE CHALLENGE
The European Union stands as India’s largest trading partner, with bilateral trade exceeding $137 billion in the 2023-24 period. In the last decade alone, since 2014, the trade between India and the EU has surged by an impressive 90 percent.
Despite multiple attempts at forming a comprehensive India-EU agreement, negotiations have faced obstacles. New Delhi has been resistant to lowering tariffs in certain sectors, while the EU has been hesitant to relax visa restrictions that currently limit Indian professionals from working in Europe.
While Europe seeks to reduce tariffs on imported cars, bikes, whiskey, and wine, India is advocating for greater access for Indian pharmaceutical companies to supply affordable medicines and chemicals throughout Europe.
Moreover, India is pushing for a reduction in import tariffs on textiles, garments, and leather goods, while also opposing a 20-35 percent carbon tax levied on industrial products like cement, steel, and aluminum.
THE INDIA-EUROPE CORRIDOR
In another key development, PM Modi confirmed that extensive discussions were conducted with European leaders regarding the strategically significant India-Middle East-Europe Corridor, commonly referred to as IMEEC.
The project, which is already under construction, aims to connect India to Europe via the Middle East (West Asia) utilizing sea, rail, and road networks. “I am confident that the IMEEC corridor will serve as a catalyst for global commerce, sustainable growth, and prosperity,” PM Modi stated at the joint press conference.
Both parties concurred on prioritizing the project to improve connectivity and reduce costs.
(Inputs from Reuters and PTI)