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India and the EU have formally re-launched negotiations on a bilateral free trade agreement after a hiatus of nine years aiming to conclude the talks by the end of 2023.
Parallel talks were also launched on an investment protection agreement and an agreement on geographical indications by Commerce & Industry Minister Piyush Goyal and European Commission Executive-Vice President Valdis Dombrovskis in Brussels on Friday.
“The first round of negotiations covering the three areas of work will be hosted by India in New Delhi from June 27 to July 1, 2022. The two sides agreed to fast-track the talks with the aim of concluding them by the end of 2023,” according to a statement issued by the EU.
Labour-intensive items
Indian manufacturers of labour-intensive items such as textiles, leather, sports goods, and processed food, are expected to benefit from the proposed FTA as elimination or reduction in duties by the EU in these items will bring Indian exporters at par with those from countries such as Bangladesh and Vietnam.
India also hopes to persuade the EU to make visa rules for its professionals and workers more flexible. The EU is seeking lower import duties on automobiles and wines and spirits, in addition to a range of other manufacturing and agricultural products, and is also keen on greater access to financial services.
“This would be one of the most significant FTAs for India as EU is its second-largest trading partner after the US”, according to a statement issued by the Commerce & Industry Ministry on Saturday.
India-EU trade in goods posted a growth of 43.5 per cent to touch a high of $116.36 billion in 2021-22. India’s export to the EU increased 57 per cent in 2021-22 to $65 billion, according to government figures.
Background
The FTA talks between India and the EU, first launched in 2007, reached a stalemate in 2013 over issues such as market access for specific goods, work visas, opening up of financial services, and the EU’s stress on the inclusion of some non-trade areas such as labour and environment.
“India is not hesitant about discussing labour issues or sustainable development and environment this time as the country’s domestic laws and international commitments are of the highest levels,” an official told BusinessLine.
Last year, an agreement was reached for resuming negotiations at the India and EU Leaders’ meeting held in Porto on May 8, 2021.
“As is the case in all EU trade agreements, the future arrangement with India will also include ambitious and enforceable provisions on trade and sustainable development, helping us to reach our climate goals under the European Green Deal, and promote high environmental and labour standards in the EU and India,” the EU reiterated in its statement.
The Geographical Indications Agreement, once concluded, will support rural communities and help preserve the cultural and culinary heritage of both sides, it added.
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