If signed, an FTA between India and the EU would be the largest deal of its kind anywhere in the world. Describing India as the voice of the Global South, the European Commission President termed 2025 an inflection point in history and said that the time is opportune for a trade deal between the EU and the world’s largest democracy.
Stating that both the EU and India are confronted with geopolitical and geoeconomic headwinds, the European Commission President said that many countries are weaponising their sources of strength against each other—whether natural resources, new technologies, or economic and military coercion.
Pointing to the use of supply chains to gain influence or drive wedges between nations and regions, she lamented an aggressive posture from major powers and conflicts that have destabilised entire regions. She stressed the need for countries, particularly in the Global South, to look for alternatives amidst attempts to split parts of the world into isolated fragments.
The statement by the European Commission President, sounding a warning about potential dangers and opportunities, comes ahead of the tenth round of negotiations for the FTA from 10th to 14th March in Brussels.
In the ninth round, India and the EU had discussed trade issues covering goods, services, investment, and government procurement, along with rules of origin, sanitary and phytosanitary issues, and technical barriers to trade.
The EU wants a tax cut for wines and spirits, a strong intellectual property regime, and significant duty cuts on automobiles. Meanwhile, India is seeking data security status for its IT sector. The absence of data security has prevented the flow of sensitive information to India.
Additionally, Indian goods exports to the EU, such as ready-made garments, pharmaceuticals, steel, petroleum products, and electrical machinery, will become more competitive if the pact is successfully concluded.
India’s bilateral trade in goods with the EU in FY 2023-24 was worth $137.41 billion, with exports worth $75.92 billion and imports worth $61.48 billion, making the EU India’s largest trading partner for goods.
The EU market accounts for about 17% of India’s total exports, while the EU’s exports to India make up 9% of its total exports. The bilateral trade in services in 2023 between India and the EU was estimated at $51.45 billion.
Apart from a free trade agreement, both sides are also negotiating an investment protection agreement and an agreement on geographical indications (GIs).
In June 2022, FTA negotiations resumed after a gap of over eight years, as talks had stalled in 2013 due to differences over the level of market liberalisation.
While India already has a Trade and Economic Partnership Agreement with the European Free Trade Association (comprising Switzerland, Iceland, Norway, and Liechtenstein), it is yet to be ratified.
This means that India has yet to experience the impact of a trade deal with any European country. Additionally, higher energy costs and the ongoing Russia-Ukraine conflict have taken a toll on European economies.
Both India and the EU are looking to hedge their risks with a trade deal amidst an increasing discourse on tariffs across the globe.
