VIF Europe Expert Group Meeting- Panel Discussion India-EU FTA: Opportunities, Challenges, and the Road Ahead

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On December 12, 2024, the Vivekananda International Foundation (VIF), as a part of their Europe Expert Group Meeting, hosted a Panel Discussion on the India-EU FTA: Opportunities, Challenges, and the Road Ahead. The session was chaired by Amb. Anil Wadhwa. The panelists included Prof. Gulshan Sachdeva, Chief Coordinator, DAKSHIN, RIS, and Professor, Centre for European Studies, JNU, and Prof. Arpita Mukherjee, Professor and Economic Policy Researcher at ICRIER. The session was also attended by Dr. Arvind Gupta and Lt. Gen. R.K. Sawhney. The discussion explored various aspects of the future of the agreement: How do the contrasting approaches of the EU’s normative and sustainability driven trade policies and India’s protectionist measures impact the FTA? Can there be a bridge between EU’s ambitious and comprehensive approach to the negotiations, and India’s preference for a sequential and phased approach to achieve progress? How can India continue to balance its self-reliance goals while negotiating this FTA to open up markets and reduce dependence on external actors, especially China, without compromising on its domestic economic priorities.

Salient Points of the Discussion

• In all phases of history, except during the colonial rule, both India and Europe have benefitted in their interactions. European Union continues to be important for India in terms of trade, technology, and linkages. The European economy, even in the case of a decline, is important for India as EU continues to be the largest investor in India.
• The EU and India are the world’s third and fifth largest economies respectively. While the EU is India’s largest trade partner, India is EU’s tenth largest trade partner, with their bilateral trade in goods valued at €113.175 billion, which included €64.860 billion in exports and €47.6 billion in imports.
• India and the EU have had slow progress since the beginning of their FTA negotiations in 2005, such that the talks were completely frozen in 2013 and were restarted in May 2021.
• EU is very competitive and tends to gain more in goods and services from India, than vice versa, in case of a successful implementation of the FTA. Mobility and procurement have been the major issues of contention in the signing of the agreement.
• European businesses are deeply engrained with China, while European governments are trying to decouple from China. In this context, the India-EU FTA can be a strategic move, rather than an economic one.
• There is a clear mandate by the European Parliament to the EU that whatever agreements they may sign must include respective clauses on human rights, labour, and sustainability. The EU has never signed an FTA, that is just about market access; they are inclined towards regulatory consistency and clarity. In this context, there needs to be better mapping of Indian standards and in-depth communication with Indian stakeholders, prior to negotiations.
• From 2013 to 2021, Indian exports had been stuck around $300 billion every year and not much progress has been made in the stagnating export figures.
• Trade barriers need to be reduced unilaterally with a more liberalized economy, to make our industries better prepared for an FTA. India also needs to have a clear political decision on procurement and investment issues.
• There is a need to raise awareness in the Indian industry with respect to FTAs and its importance in context of participation in global supply chains. Presently, the Indian businesses are unable to take advantage of the FTAs due to lack of knowledge and awareness.
• There is an urgent need to improve and strengthen negotiating strategies and methods on the Indian front with detailed sectoral studies on the impact of FTAs on the Indian industry.
• As the next round of the India-EU FTA negotiation is scheduled to take place in March 2025, it is important to note that although it could be a long journey to reach an agreement of mutual benefit, despite several setbacks, it is not out of reach.