Even as the second round of negotiations between India and the European Union (EU) for a free trade agreement (FTA) is scheduled to begin in Brussels in September, the proposal made by the EU in the initial stage indicates that it could cover a wide range of areas including topics like government procurement, digital trade, state-owned enterprises and intellectual property (IP) that have remained sensitive for India in the past.
According to the text proposed by the EU, all government and sub-government procurement and all services other than construction services should be brought within the ambit of the India-EU FTA. Incidentally, India’s government procurement cumulatively comes to one-fifth of the country’s GDP. While India has included ‘government procurement’ under the FTA for the first time in the just concluded India-UAE and India-Australia trade agreements, its impact, if incorporated in the India-EU agreement, could be much bigger.
With a bilateral trade of $116.36 billion in 2021-22., the EU is currently India’s second-largest trading partner after the U.S. and the second largest destination for Indian exports. Commerce ministry statistics point out that despite the global disruptions, bilateral trade achieved a 43.5% growth in 2021-22. A trade agreement with the EU is expected to help India in further expanding and diversifying its exports of goods and services, including securing the value chains. The commerce ministry, in July 2022, had stated that both sides are aiming for the trade negotiations to be broad-based, balanced, and comprehensive, based on the principles of fairness and reciprocity.
The EU lists out 20 distinct areas where it has proposed negotiations. This includes sectors like trade in goods, rules of origin, customs and trade facilitation, trade remedies, sanitary and phytosanitary measures, technical barriers to trade, services and investments, etc., that tend to get negotiated in every FTA. The other textual proposals are on anti-competitive conduct, merger control and subsidies, small and medium-sized enterprises, energy and raw materials, transparency, good regulatory practices, sustainable food systems, dispute settlement, anti-fraud and mutual administrative assistance in customs matters.
The first round of negotiations for India-EU Trade and Investment Agreements, including the Geographical Indicators (GI), concluded in New Delhi on July 1. The ministry of commerce and industry had stated the week-long negotiations were held in a hybrid fashion – with some of the teams meeting in Delhi and the majority of officials joining virtually hybrid fashion. The first round saw 52 technical sessions covering 18 policy areas of the FTA.