Negotiating the FTA in two phases allows both sides to first conclude areas where agreement can be reached more easily. Complex issues can be dealt with at a later stage.
“FTA in tranches are being explored with the EU,” the official said.
The two sides concluded the 10th round of negotiations in Brussels last month for the proposed agreement. The next round of talks is expected in May here.
The official added that after the visit of European Commission President Ursula von der Leyen with the EU College of Commissioners or senior political leaders of the bloc here, the talks are moving in a positive direction and the momentum is also building.
According to trade experts, strengthening economic ties between the two regions is crucial in light of high tariffs imposed by US President Donald Trump on April 3. In June 2022, India and the 27-nation EU bloc resumed the negotiations after a gap of over eight years. It stalled in 2013 due to differences over the level of opening up of the markets. On February 28, Prime Minister Narendra Modi and the European Commission President agreed to seal a much-awaited free trade deal by this year.
The India-EU trade pact negotiations cover 23 policy areas or chapters including Trade in Goods, Trade in Services, Investment, Sanitary and Phytosanitary Measures, Technical Barriers to Trade, Trade Remedies, Rules of Origin, Customs and Trade Facilitation, Competition, Trade Defence, Government Procurement, Dispute Settlement, Intellectual Property Rights, Geographical Indications, and Sustainable Development.
Besides demanding significant duty cuts in automobiles and medical devices, the EU wants tax reduction in wines, spirits and a strong intellectual property regime.
Indian goods’ exports to the EU, such as ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery, can become more competitive, if the pact gets concluded successfully.
India’s bilateral trade in goods with the EU was USD 137.41 billion in 2023-24 (exports USD 75.92 billion, imports USD 61.48 billion), making it the largest trading partner of India for goods.
The EU market accounts for about 17 per cent of India’s total exports, while the EU’s exports to India make up 9 per cent of its total exports.
In addition, the bilateral trade in services, in 2023, between India and the EU was estimated at USD 51.45 billion.
The agreement is aimed at further boosting bilateral trade and investments between the two. The two sides are negotiating a free trade agreement, an investment protection agreement and an agreement on geographical indications (GIs).
Further on the implementation of a free trade agreement between India and the four-nation European bloc EFTA, the official said that the parliaments of all four European nations have cleared the pact.
In the case of Switzerland, a referendum is required for ratification of the agreement.
The two sides are aiming to implement the pact by the end of this year.
The European Free Trade Association (EFTA) members are Iceland, Liechtenstein, Norway, and Switzerland.
The two sides signed the Trade and Economic Partnership Agreement (TEPA) on March 10, 2024. Under the pact, India has received an investment commitment of USD 100 billion in 15 years from the grouping while allowing several products such as Swiss watches, chocolates and cut and polished diamonds at lower or zero duties.
