Commerce and Industry Minister Piyush Goyal’s visit to key EU member-countries, France and Italy, assumes significance in view of post-Covid supply chain disruptions, the Ukraine-Russia war and US-China and Australia-China trade tensions.

India is rapidly emerging as a strategically preferred trade partner for the European Union, thanks to India’s neutral stand in the rapidly emerging multi-polar world.

India’s latest outreach to France and Italy will have a significant impact in its relations with the EU. Reports suggest top French and Italian businesses are keen on engaging more with India. India’s rapid economic and technological rise in turbulent times — most countries are still struggling to come out of their economic woes — is a key reason for EU firms evincing interest.

Technological complementarities between the EU and India offer excellent opportunities to collaborate in a range of high-tech goods including machinery, drone and aircraft manufacturing, pharmaceutical and IT research. This will help both sides — India in terms of achieving self-reliance, and the EU which is looking for an alternative manufacturing location to China.

In view of our thrust on ‘Make in India’, collaboration in technology-intensive manufacturing and defence production has fast emerged as a key area of mutual synergy and immense investment opportunities.

The EU is India’s third largest trade partner whereas India is EU’s tenth largest. While India’s merchandised trade grew by 30 per cent in the last decade, trade with the EU has witnessed spectacular growth in recent years, with exports rising from $41 billion in 2020-21 to $67 billion during April- February 2022-23 and imports from $40 billion to $54 billion.

Interestingly, India had a trade deficit with the EU in 2018-19 that turned into a trade surplus of $13 billion during April-February 2022-23.

India-EU trade negotiations, which had stalled since 2013, resumed in June 2022 and is evolving into a ‘balanced, ambitious, comprehensive and mutually beneficial’ trade agreement. The fourth round of India-EU trade negotiations took place in March in Brussels and the fifth phase is scheduled to resume in mid-June.

India-EU FTA is likely to be more comprehensive than India’s recent deals with Australia and the UAE, as it has an ambitious aim to liberalise 94 per cent of the trade in goods. It is also expected to have a separate chapter linking trade with sustainable development.

The ambitious timeline of concluding the negotiations by 2023 seems quite challenging but to keep up the pace and facilitate consensus, complex and contentious issues such as geographical indications and investment protection, are being negotiated separately but parallelly.

Technically, an FTA can be approved by the European parliament, but the investment protection agreements need to be ratified not only by the EU parliament but also by the parliaments of individual member-countries. Therefore, separate negotiations are expected to facilitate speedy deliberations and early conclusion of negotiations in the areas of consensus.

India’s spectacular GDP growth rate of 6.9 per cent in 2022, almost double that of the EU’s 3.5 per cent, makes India a lucrative market as well as an attractive investment destination for the EU.

India-EU FTA is likely to pave way for enormous opportunities not only in trade and investment but also in forging strategic international partnership at the world fora, making it a win-win deal.

With divergent national interests and intricacies associated with a group of 27 countries within the EU, negotiators from both sides need to be sensitive to each other’s ground realities for expeditious conclusion of the deal.

The writer is Director, IIPM, Bengaluru, and Professor, Indian Institute of Foreign Trade, New Delhi

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