New Delhi: India and the European Union have set a year-end target to finalize a long-pending Free Trade Agreement (FTA), aiming to strengthen economic relations. The decision was announced after discussions between Prime Minister Narendra Modi and European Commission President Ursula von der Leyen in New Delhi.
Key Developments in India-EU Negotiations
Free Trade Agreement (FTA) Progress
Negotiations on the India-EU trade agreement have resumed after previous discussions stalled in 2013 and 2021. The FTA aims to expand trade opportunities, particularly in sectors such as green technology, pharmaceuticals, and semiconductors.
Strategic Partnership Roadmap
Both sides are working on a long-term partnership roadmap, set to be unveiled at the next India-EU summit, outlining economic and security collaborations beyond 2025.
Strengthening Security & Naval Cooperation
The EU emphasized the need to secure critical global trade routes, including joint naval exercises in strategic locations such as the Red Sea.
Challenges in Finalizing the Trade Deal
Despite the EU being India’s largest trading partner, with bilateral trade surpassing $137 billion in 2023-24, several challenges remain:
- Tariff Reductions: The EU is pushing for lower tariffs on automobiles, motorcycles, and luxury goods, while India seeks greater market access for its pharmaceutical and textile industries.
- Visa Policies: India is advocating for more flexible visa rules to facilitate the movement of professionals to Europe.
- Carbon Tax Concerns: India opposes the EU’s carbon tax of 20-35% on industrial goods such as cement and steel, citing concerns over trade barriers.
India-Middle East-Europe Economic Corridor (IMEEC) Gains Momentum
A major topic during the discussions was the India-Middle East-Europe Economic Corridor (IMEEC), a key infrastructure project designed to enhance trade between India and Europe via the Middle East through sea, rail, and road networks. PM Modi highlighted the initiative’s potential to foster global trade, sustainable growth, and economic prosperity.
Both India and the EU reaffirmed their commitment to accelerating the project, emphasizing its role in boosting international connectivity and reducing trade costs.
