India-EU leaders flag slow progress in free trade agreement talks

Delphin and Goyal also highlighted the need to resolve constraints and regulatory hurdles faced by companies while doing business in India and the EU, respectively

Top government officials from India and the European Union (EU) on Friday acknowledged slower than expected progress in the proposed trade agreement and called for mutual cooperation and understanding to take the negotiations forward.

Commerce and Industry minister Piyush Goyal said that “extraneous elements,” having no relevance to trade or business, are hurting the interests of both trade and business.

They are slowing down the progress of India-EU Free Trade Agreement (FTA) negotiations, he said.

“The EU will have to decide whether they are looking at expanding trade, expanding business between the two sides, or whether they are looking at issues which are dealt with by other international organisations… we should be focusing more on our mutual engagements through our FTA on trade and business-related issues,” the minister said at the launch of the Federation of European Business in India (FEBI).

 

EU Ambassador to India Hervé Delphin, who was also there at the launch, pointed out that the progress in the FTA has been ‘marginal’ as both sides are yet to overcome the ‘fundamental differences’.

In order to finalise the trade agreement, according to Delphin, both sides need to re-calibrate, but also ensure that the trade deal is meaningful.

“Both sides must reflect on potential packages of mutual concessions, which would see both parties move into trade policy territory where they have never ventured so far. The EU will be ready to do its share, but this will also require India to cover a large part of the distance that still separates us for the time being. The time has come for such a political call,” he said.

In June 2022, India and EU kick-started formal negotiations towards an FTA that has been stuck for close to nine years. Nine rounds of negotiations have taken place till now and the next round is expected early next year.

Delphin and Goyal also called upon the need to resolve constraints and regulatory hurdles faced by companies while doing business in India and in the EU, respectively.

Delphin pointed out the need to address issues such as quality control orders, stringent import licences, legal uncertainties regarding investment protection and taxation, that European businesses grapple with in India,

Goyal touched upon ‘unfair’ trade practices, in the form of ‘irrational’ duties such as Carbon Border Adjustment Mechanism (CBAM) and deforestation-related duties.

Goyal also said that for over half a decade, India has been negotiating on such duties which are against the Most Favoured Nation (MFN) clause of the World Trade Organization (WTO) since the EU has been bringing in newer elements in the Indo-EU trade relationship.

“We have the same problem on standards that irrational standards are set by the EU which act as a trade barrier to expanding trade between India and the EU. We have people coming and telling us about the significant unfair trade practices on the European side… I have been requesting that India doesn’t have any unfair trade practices, why should we be subject to additional duty also, and after six years, we may have to take other measures,” said Goyal. 

“The world today can’t work on the principle of retaliation. It has to work on the principle of mutual cooperation and finding solutions,” Goyal added.