The EU and India have announced the completion of negotiations regarding a free trade agreement (FTA), the largest deal of this kind ever finalised by either party.
With this agreement, the EU and India intend to solidify economic and political cooperation during a time when geopolitical tensions and global economic issues are peaking. The move underlines a shared commitment to economic openness and rules-based trade.
Talking about this key milestone, Ursula von der Leyen, European Commission President, said that the two regions now deepened the collaboration between the world’s largest democracies. She added that the EU and India have established a free trade zone of two billion individuals, with both sides set to benefit from an economic standpoint. Also, this comes as a first step in growing their relationship to become even stronger.
Expected outcomes
Until now, the EU and India have been trading over EUR 180 billion worth of goods and services per year, facilitating nearly 800,000 EU jobs. As a result of this deal, the two regions expect to double EU goods exports to India by 2032 by mitigating or decreasing tariffs in value of 96.6% of EU goods exports to India. Largely, the tariff reductions will save approximately EUR 4 billion per year in duties on European products.
Coming as one of the most ambitious trade openings that India has granted to a trade partner, the agreement will provide a competitive advantage to EU industrial and agri-food sectors, offering companies the ability to access the world’s most populous country of 1.45 billion people and an annual GDP of EUR 3.4 trillion.
Upcoming benefits
- Small EU businesses will have the opportunity to take advantage of the new export opportunities. Both the EU and India will have dedicated contact points to bring relevant information on the FTA to SMEs and support them with specific challenges they would face when trying to use the agreement’s provisions. Additionally, businesses will benefit from tariff decreases, the elimination of regulatory barriers, scaled transparency, stability, and predictability.
- The FTA mitigates or decreases tariffs on EU exports of agri-food products, therefore facilitating a significant market for European farmers. Also, sensitive European agricultural sectors will be safeguarded, as products such as beef, chicken meat, rice, and sugar are excluded from liberalisation. Indian exports will continue to have to comply with the EU’s health and food safety guidelines.
- EU companies will receive privileged access to the Indian services market, including key sectors such as financial services and maritime transport. The FTA brings a high level of protection and enforcement of Intellectual Property rights, including copyright, trademarks, trade secrets, and plant variety rights.
- The agreement focuses on trade and sustainable development, aiming to improve environmental protection and address climate change, safeguard workers’ rights, support women’s empowerment, facilitate a platform for dialogue and cooperation, and ensure effective implementation.
What happens from here
When it comes to the EU, the negotiated draft texts will be published in the upcoming period. The texts will be legally revised and translated into all official EU languages. Afterwards, the Commission will provide its proposal to the Council for the signature and conclusion of the agreement.
Following the adoption by the Council, the EU and India can sign the agreements. The next step will be to secure the European Parliament’s consent, as well as the Council’s decision on the conclusion for it to come into effect. After India ratifies the Agreement, it can enter into force.
