India-European Union Free Trade Agreement
India and the European Union (EU) have resumed talks on the India-EU Free Trade Agreement (FTA) after a gap of 9 years.
- In addition to the Free Trade Agreement, negotiations have begun on the following agreements: a separate Investment Protection Agreement (IPA), and a Geographical Indication (GI) agreement.
- The European Union is India’s second largest trading partner. India’s bilateral trade with it reached an all-time high of US$ 36 billion in 2021-22. India has a trade surplus with the European Union, i.e., the balance of payments is in favour of India.
- Given the above conditions, it is one of the most important free trade agreements for India. India’s major exports to the European Union include: Mineral fuels, Mechanical equipment, Electrical and electronic machinery, Automobiles and auto equipment, Pharmaceuticals, Precious Stone etc.
- India started negotiations for a free trade agreement with the European Union in But the talks stalled in 2013. This was because the two sides had failed to reach an agreement on key issues such as tariffs on automobiles and spirits, agriculture and dairy, and movement of professionals.
Importance of Free Trade Agreement between India-EU
- This will help Indian exporters to gain a competitive advantage in the EU markets. This will help domestic manufacturers gain access to cheaper EU imports.
- The European Union is considered to be the main source of technology transfer and development to India. The Free Trade Agreement will give a boost to the Make in India and Self-reliant India initiative.
- The EU is also looking for a bigger market, as trade within the EU has stabilized. In addition, its trade with the United Kingdom is also declining.
Free Trade Agreement (FTA)
- There is an ambitious trade agreement between the countries. It provides preferential facility to the other party on the basis of negative list.
- Investment Protection Agreement (IPA) is a mutual agreement. Here the signatory parties undertake to promote and protect private investment made by citizens in each other’s territories. The Geographical Indication (GI) Agreement establishes a transparent and predictable regulatory environment to facilitate trading of GI products.
Source – The Hindu