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EU delegates to visit India in February for FTA discussions

Live Mint - 25 January 2024

EU delegates to visit India in February for FTA discussions
By Dhirendra Kumar , Rhik Kundu

A 15-member team from the European Union (EU) will travel to New Delhi on 19 February for a week of deliberations on a potential free trade agreement (FTA) with India, two people aware of the matter told Mint.

The upcoming seventh round of negotiations is expected to centre on services and investments, building on earlier talks that covered goods and public procurement.

Key issues include India’s trade disputes at the World Trade Organization regarding products like mobile phones and components, as well as integrated circuits and optical instruments, said one of the persons cited above, requesting anonymity.

Geographical indications (GIs) will also be on the agenda, with both sides aiming to advance discussions in this area. According to the EU’s website, these bilateral agreements aim for substantial advancements in the protection of geographical indications, enhancing GI safeguards within the trade partner’s territory to a standard akin to that upheld by the EU. -

Besides rules and principles, the agreements include lists of GIs to be protected under FTAs.

"The EU is pushing its demand to remove trade barriers for small firms, and open the Indian procurement market. For India, the sectors like agriculture, dairy and micro, small and medium enterprises are very sensitive and New Delhi would not like to open these sectors for European producers," said the other person cited above.

India will negotiate on these sectors based on reciprocity and equity, prioritizing domestic interests, the person noted.

During the sixth round of talks between the EU and India in October, progress was made in 18 out of 23 chapters. The seventh round will see the EU delegation visit India in different batches, with the first group of arriving on 19 February for a dialogue that includes over 50 technical sessions.

"Both sides are scheduled to discuss some of the pertinent issues. The talks are on the right track and we expect a positive outcome," the first official said, but added that reaching an FTA with the EU, comprising 27 countries with distinct trade concerns, is expected to be a lengthy process.

The EU and India had first launched negotiations for an FTA in 2007, but talks were suspended in 2013. Discussions resumed on 17 June 2022, led by India’s commerce minister Piyush Goyal and European Commission executive vice president Valdis Dombrovskis.

Emailed queries sent to India’s commerce ministry and European Commission’s press officer remained unanswered till press time.

The EU is a major export destination for India, second only to the US. However, non-tariff barriers by EU have contributed to a decline in India’s goods exports to the bloc over the past two decades. An FTA could reduce duties and address barriers affecting Indian agricultural exports.

Additionally, India’s production-linked incentives could enhance exports in textiles, pharmaceuticals, and mechanical appliances, which are significant EU imports.

However, EU climate regulations, including the Carbon Border Adjustment Mechanism and Deforestation Regulation, can complicate the trade agreement prospects.

Significant differences in standards, particularly in key trade items like drugs, electrical equipment, and motor vehicles, present another challenge. Aligning these with international standards will be crucial for the success of any FTA between the EU and India.

 source: Live Mint