EU-India FTA and implications for Sri Lanka

AFTER nearly two decades of painstaking negotiations, India and the European Union (EU) successfully concluded negotiations on a landmark Free Trade Agreement (FTA) last month.

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The trade pact intends to liberalise trade and investment between the two economies through planned commitments covering goods, services, and regulatory cooperation. Both India and the EU together account for 23% of the global GDP (close to $ 25 trillion) and 25% of the world’s population (2 billion). Currently, cross border goods and services trade between the two regions is close to $ 220 billion.

The deal is widely seen as a strategic hedge against the volatile trade policies and tariff threats of the Trump Administration. The White House imposed a 15% tariff on EU imports last year despite agreeing on a trade deal with the bloc, while goods from India were slapped with a more punitive 50% because of its ongoing oil purchases from Russia. Many analysts opine that Trump’s unpredictable trade policies hastened the finalisation of the landmark deal.