India-European Union (EU) relations have been on an upswing in the past few years. The EU is India’s largest regional trading partner, while India is the EU’s 9th largest trading partner. India’s bilateral trade with EU in 2017-18 stood at $76.90 billion with India’s exports valued at $30.35 billion and India’s imports from the EU at $46.55 billion. Over the period April 2000 to June 2017, FDI flows from EU countries totalled $83.7 billion. There are more than 6,000 EU companies currently present in India, providing direct and indirect employment to over 6 million people. Against this background, the EU-India Free Trade Agreement is a natural culmination of robust economic relations. However, the reality is in stark contrast as with almost 16 rounds of negotiations, the agreement has not yet been finalised. The paper explores the negotiations between India and the EU highlighting the contentious issues, and what next for the agreement.
Background to the Negotiations
The diplomatic relations between India and EU were established in the 1960s, however, the 1994 Cooperation Agreement opened the door for larger political interactions between the two. In recognition of both sides’ political and economic importance, the EU-India Strategic Partnership was signed in 2004 to enable the partners to better address complex international issues. For this objective, at the 2005 Summit EU-India Joint Action Plan was adopted which defined common objectives and proposed a wide range of supporting activities in the areas of political, economic, and development cooperation. Under the aegis of this Joint Action Plan, High-Level Trade group was established which recommended the initiations of negotiations for a comprehensive free trade agreement – called Broad Based Trade and Investment Agreement (BTIA) - between India and EU. A go-ahead was provided during the seventh summit in 2006 in Helsinki move towards negotiations which were then launched in 2007.
The negotiations in their initial stages were largely on select issues like trade in goods and services, investment, intellectual property, public procurement etc. The roadmap for negotiations included: first, trade in goods which included elimination of duties on 90 percent of the tariff lines and trade volume within seven years of the entry into force; second, trade-in services so as to ensure maximum sectoral coverage measured in the number of sectors, volume of trade and modes of supply; and third, investments by improving the market access and providing non-discriminatory treatment to foreign investors.
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