After India-EU Summit, Is a Free Trade Agreement on the Cards?

Even as the European Union has got politically weakened by Brexit, internal tensions between western European countries and eastern ones, notably Hungary and Poland, over issues of democracy and European values, problems of migration, Islamism, terrorism and rise of right-wing forces, and, in addition, economically enfeebled by the still-uncontrolled COVID crisis, India has decided to draw closer to it, driven by its own political and economic challenges. The European Union as an entity is India’s biggest economic partner, with a roughly balanced two-way trade amounting to $115.6 billion, the second largest destination for Indian exports. The EU’s website says that it wants an agreement that is “economically meaningful, delivering real new market openings in all sectors to both sides, contains a solid rules-based component, and includes a comprehensive trade and sustainable development chapter, notably to deal with social and environmental impacts.” This is tough, demanding language that seeks to lay down EU’s terms of engagement. Apparently, a lot of technical work has already been done prior to the summit, including political-level discussions between Commerce Minister Piyush Goyal and the EU Executive Vice-President and Commissioner of Trade Valdis Dombrovskis, with the first meeting of the EU-India High Level Dialogue on Trade and Investment held in February this year wherein it was agreed that negotiations for an ambitious, comprehensive and mutually beneficial agreement will begin once the respective approaches and positions are close enough. The language remains blunt when it says, “We agreed that in order to create the required positive dynamic for negotiations, it is imperative to find solutions to long-standing market access issues.” There is agreement on creating joint working groups on regulatory cooperation on goods and services, including green and digital technologies, and on resilient supply chains, building on the experience gained from the COVID-19 pandemic.