India and the European Union (EU) are intensifying their efforts to forge a balanced, ambitious, and mutually beneficial free trade agreement (FTA). This ambitious pact, currently undergoing negotiations, promises to reshape the economic landscape for both powerhouses. The Ministry of Commerce and Industry recently issued a statement reaffirming India’s commitment to achieving a commercially meaningful deal, acknowledging the need to navigate delicate political and economic sensitivities.
The ninth round of negotiations, held from September 23rd to 27th, 2024, saw limited progress on crucial issues such as rules of origin and government procurement. These sticking points highlight the complexity of balancing the interests of two diverse economies. Commerce and Industry Minister Piyush Goyal, during discussions with a European Commission delegation, emphasized the critical role of political direction in overcoming these hurdles and achieving a successful outcome. He stressed the importance of the principle of common but differentiated responsibilities (CBDR) in sustainability discussions, recognizing the varying developmental trajectories of India and the EU. Minister of State for Commerce and Industry Jitin Prasada and senior officials from both sides also participated in these crucial meetings.
The economic stakes are undeniably high. India’s rapidly expanding economy, projected to grow at 7-8% annually and become the world’s third-largest economy within the next few years, with a GDP expected to reach $35 trillion by 2047, presents a lucrative opportunity for the EU. Conversely, the EU, already India’s largest trading partner in goods, with bilateral trade reaching $137.41 billion in 2023-24 and an additional $51.45 billion in services trade, stands to benefit significantly from enhanced market access and streamlined trade flows. The potential for substantial gains, including the creation of resilient supply chains, is widely acknowledged by both sides.
The partnership extends beyond mere trade. With the EU being the second bloc, after the US, to establish a Trade and Technology Council with India, this collaboration signals a strategic alignment that transcends traditional trade relations. Given India’s ambitious target of achieving $2 trillion in exports by 2030, the FTA is poised to play a pivotal role in accelerating this goal. The upcoming negotiations, scheduled for the first quarter of 2025, will be crucial in bridging the gap on sustainability concerns, particularly given the EU’s strong emphasis on environmental protection. Finding common ground on climate commitments will be a key determinant of the agreement’s success.
The talks involved a high-level delegation from the European Commission, including ambassadors and representatives from numerous EU member states, alongside India’s commerce and DPIIT secretary. This broad representation underlines the significance both sides attach to this crucial FTA, and the commitment to forging a mutually beneficial partnership that strengthens economic ties and fosters collaboration on a global scale. The successful conclusion of this FTA will significantly impact global trade dynamics and shape the future economic trajectory of both India and the European Union.
