India, EU: Working on FTA and Transformative Initiatives
STORIES, ANALYSES, EXPERT VIEWS
U.S. President Donald Trump urged EU officials Tuesday to hit China with tariffs of up to 100% as part of a strategy to pressure Russian President Vladimir Putin, according to a U.S. official and an EU diplomat. Trump also encouraged the European Union to slap India with similarly expansive tariffs, said a EU diplomat. The diplomat said the U.S. had indicated it was willing to impose similar tariffs if the European Union heeded the U.S. request. ‘They are basically saying: We'll do this but you need to do it with us,’ the diplomat said.
Trade talks
Separately, even as India-US trade relations continue to be mired in uncertainty, on September 4, Prime Minister Narendra Modi and European Union leaders spoke about an 'early conclusion’ of the India-EU Free Trade Agreement.
European Commission's agriculture commissioner Christophe Hansen and trade chief Maros Sefcovic are in India holding talks with their Indian interlocutors as both sides look to seal the free trade agreement (FTA) by end of this year.
Negotiations on several key chapters including rules of origin and market access are yet to be concluded. There are issues relating to non-tariff barriers as well but both sides are hopeful of resolving all contentious matters by finding the ‘right equilibrium’.
This is the 13th round of negotiations for the FTA. The next round has been slated for early next month in Brussels.
Talks underline India’s willingness to deepen its trade relationship with the world
The Indian Express states “these talks underline India’s willingness to deepen its trade relationship with the world. These are welcome signs in uncertain times.”
The EU is a large market. In 2023-24, the bilateral trade in goods between India and the EU stood at $137.41 billion. In services, it was $51.45 billion in 2023. And then there is investment — FDI flows from the EU were valued at $107.27 billion between April 2000 to December 2023. A trade deal would deepen the relationship. Several rounds of negotiations on the agreement have already taken place. Of the 27 chapters in the trade deal, negotiations have reportedly been concluded on 11 chapters.
Several contentious areas: There are, however, “several contentious areas, agriculture and dairy in particular. Another area of concern is the EU’s Carbon Border Adjustment Mechanism, which enters into its definitive regime from January 1, 2026. This would impact a range of sectors like steel, cement, and automobiles. Delhi is looking for concessions similar to those received by the US. The two sides are looking to conclude negotiations by the end of this year.”
The transformative initiatives: politico-strategic vision
Besides the trade deal, India and the EU are also in the process of firming up a series of transformative initiatives including a new politico-strategic vision and key foundational frameworks to expand defence ties — moves that came against the backdrop of increasing geopolitical uncertainty.
Significantly, the EU will unveil its new strategic vision for ties with India on September 17 that will comprise key elements of its futuristic outlook for relations with New Delhi.
The new measures are expected to be unveiled at the India-EU annual summit that is likely to be held in India within the first few months of next year.
The two sides will also hold a series of high-level meetings and talks in the next three months that include a visit to India by the EU's Political and Security Committee comprising envoys of the bloc's 27 member nations.
The India-EU counter-terror talks are also slated for this month in Brussels while the Standing Committee of EU parliament on trade will visit New Delhi in October. It will be followed by the Indo-Pacific ministerial forum on November 20-21.
EU-India Trade and Technology Council (TTC) meeting
The next meeting of the EU-India Trade and Technology Council (TTC) is also likely to take place in November. The foreign policy and security dialogue between the two sides are also set to be held in Delhi.
The EU's High Representative for Foreign Affairs and Security Policy, Kaja Kallas, is expected to visit India either in December or in January.
To boost defence cooperation, the two sides are negotiating a security of information agreement and two other frameworks with a larger aim to ramp up defence ties including to jointly develop military equipment and hardware, the sources said.
The TTC was unveiled in 2022 to facilitate exchange of critical technologies relating to an array of domains including artificial intelligence, quantum computing, semiconductors and cybersecurity.
The TTC with India was the European Union's second such technology partnership after the first one with the United States that was firmed up in June 2021.
