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India-EU FTA next round to start in early May

Mint | 8 April 2024

India-EU FTA next round to start in early May

by Dhirendra Kumar

New Delhi: The eighth round of negotiations for the India-European Union free trade agreement (FTA) are slated to start next month, with India making changes to its negotiating team to speed up the process, two people aware of the matter said.

While both sides have indicated a willingness to adjust their positions on certain contentious issues, India intends to take a firm stance on persistent challenges such as non-tariff barriers. These obstacles significantly hinder trade progress in sectors including agricultural commodities, pharmaceutical items, engineering goods, and electrical items, the persons mentioned above said.

Geographical indications (GIs) will also be on the agenda, with both sides aiming to advance discussions in this area, the first person said.

The negotiators will discuss sticky issues such as stringent EU safety standards for agricultural commodities and drugs, as well as high tariffs, the first among the two persons cited above said.

In the EU, which comprises 27 countries, as well as in some other developed economies, a phytosanitary certificate is necessary for exporting agricultural products. This certificate confirms that the produce is free from pests and diseases and complies with health standards, including traceability to the farm level.

Queries emailed to the commerce secretary and spokespersons of the commerce ministry and the EU remained unanswered till press time.

The government has restructured its negotiating team to expedite the free trade agreement deal, assigning senior bureaucrat Darpan Jain to lead the negotiations.

Other 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, the second person said, requesting anonymity.

India is also advocating labour-intensive textiles and apparel products to be classified as non-tariff items, the above person said.

EU nations impose higher import duties, typically 10-12%, on textile products, placing India at a disadvantage compared to China, the EU’s leading supplier of apparel and textiles, the person mentioned above said.

Meanwhile, the EU is aiming to bargain hard to gain access to India’s services and public procurement markets, ensure the protection of geographical indications, and uphold its ambitious commitments on trade and sustainable development. These commitments include imposing maximum residue level (MRL) limits on agricultural products, industry experts said.

The EU’s proposed Carbon Border Adjustment Mechanism (CBAM) and Deforestation-free Regulation (EUDR) are expected to impede around 8-10% of Indian agricultural, steel, and aluminum exports to the bloc.

India’s exports to Europe saw a marginal growth of 1.8%, reaching $89.04 billion in April-February 2024 of FY24, compared to $87.43 billion in the corresponding months of the previous fiscal year.

The EU is India’s third largest trading partner, accounting for $97billion worth of trade in goods in 2021 or 10.8% of total Indian trade. India is the EU’s 10th largest trading partner, accounting for 2.1% of EU total trade in goods. Trade in services between the EU and India reached $33.6 billion in 2020.

As per the EU website, around 6,000 European companies operate in India, directly employing 1.7 million people and indirectly supporting an additional 5 million jobs across various sectors.

 source: Mint