After a gap of about eight years, India and the EU will resume formal negotiations for a trade and investment agreement on May 8, with both sides aiming to expedite a deal to aid economic growth in the post-pandemic era.
In a virtual meeting with Portugal’s foreign minister Augusto Santos Silva on Tuesday, finance minister Nirmala Sitharaman said “that resumption of formal negotiations on both Trade and Investment agreements at the Leaders’ Meeting of India and EU on 8th May, 2021 in Porto, Portugal would be a notable success for the Portuguese Presidency of the Council of the European Union”, the finance ministry tweeted. Prime Minister Narendra Modi is scheduled to attend the leaders’ summit.
The EU, including the UK, was India’s largest export destination (as a bloc) in FY20, with a 17% share in the country’s overall outbound shipments.
The dialogues come at a time when India’s planned free trade agreement (FTA) with the EU has lost some of its sheen, thanks to Brexit. The UK accounted for 16% of India’s $53.7-billion exports to the EU in FY20. Hence, trade deals with both the EU and the UK are crucial. In fact, India and the UK are also exploring the feasibility of a trade agreement.
After 16 rounds of talks between 2007 and 2013, negotiations for an India-EU FTA were stuck due to differences, as the bloc insisted that India cut import duties on automobiles and wine (which would benefit mainly Germany and France), among others. The UK is unlikely to be too rigid over these issues, analysts have said.
In February, commerce and industry minister Piyush Goyal had pitched for a quick “early-harvest deal” with the EU, in a meeting with EU trade commissioner Valdis Dombrovskis. This, he had suggested, could be followed by a time-bound and balanced FTA.
The renewed thrust on trade talks after the Covid-19 disruptions reinforces India’s commitment towards greater integration with the global value chain, just as it maintains that its Atmanirbhar initiative is not inward-looking. Having pulled out of the China-dominated RCEP deal, India has been seeking to expedite trade talks with large markets.
India and the EU have already agreed to a review of the progress of discussions on the proposed bilateral trade and investment agreement on a monthly basis by senior officials. It will be followed by a quarterly review by both Goyal and Dombrovskis.