India-EU trade deal negotiations are nearing a breakthrough as both sides push to conclude talks that could reshape economic and strategic ties. In the near future, India will experience a defining moment in its diplomatic relations with EU nations. With so much expectation on both sides, trade negotiators appear very close to completing negotiations after long negotiations. Officials believe the agreement will change the strategic landscape. The rise in global trade protectionism has highlighted the relevance of the agreement for more than just economics. In addition, countries are expanding their market opportunities by coordinating their timelines for implementation in January.
For Commerce Minister Piyush Goyal, the tone of the statements is confident. The Minister has said, “This will be the mother of all deals.” He said that there is clarity regarding both the scale of ambition and the timing of implementation for both sides. The EU and India represent almost 2 billion consumers worldwide. Pursuing economic complementarity rather than competition is a priority for both sides of this agreement. Both parties wish for this agreement to be mutually beneficial for both sides; as a result, they are now focused on determining acceptable trade-offs for implementing the agreement.
The EU and India have been negotiating this agreement since 2007 and have conducted several rounds of negotiations before the end of 2013. Trade disputes surrounding IFRs, tariffs, and standards were the reasons for significant delays in the completion of the agreement. Other issues, including automobiles, alcohol, IPRs (intellectual property rights), and data governance issues, were all major reasons why the negotiations stalled. The COVID-19 pandemic has caused significant disruptions to global supply chains. This event has renewed the sense of urgency for Indian and EU countries to strengthen their trading relationships.
Why the India-EU trade deal matters now
India needs to urgently seek new export markets due to stalled negotiations with the U.S., resulting from increasing tariffs. Washington has placed more tariffs on Indian exports, and the EU is currently India’s largest trade partner, as evidenced by a recent merchandise trade of over $136 billion wherein India’s exceeds import’s in that relationship. Policymakers believe in economic diversification as a necessity. Goyal emphasises the need to protect sensitive domestic sectors while highlighting the dairy and carbon mechanisms as the most important components of negotiations. Goyal notably points out that the current negotiations differ from previous trade agreements in that prior FTAs created unfavourable conditions for India’s local industries.
Additionally, he praises Prime Minister Modi for attempting to work with developed nations. Goyal noted that both government officials and negotiators committed themselves to safeguarding local agricultural producers and small businesses. Goyal mentioned that negotiators were keeping at least some of these sensitive areas partially out of scope while continuing discussions regarding them.
Geopolitics adds weight to the ‘mother of all deals.’
European nations are working to lower their reliance on China, while also seeking to curtail India’s dependence on Russia. Both India and Europe perceive the fragility of their supply chains and intend to develop resilient, trustworthy, and stable trade routes between them. The agreement includes provisions for investment possibilities and geographical indications. As a result of European Commission President Ursula von der Leyen’s trip to visit Indian officials in 2025, both leaders moved quickly to accelerate negotiations, and they expect to make an announcement during the upcoming summit.
The completion of this trade agreement would have far-reaching implications for global trade. It would demonstrate strong support for free trade policy, represent India’s growth as a mature and confident economic power, and increase Europe’s commitment to Asia. Ultimately, both parties look forward to completing the agreement and emerging from this partnership with a new, strong handshake.
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