One of India's longest pending trade deals just got a new lease of life, with the announcement of the European Union (EU)—India Trade and Technology Council.
The announcement Monday afternoon came on the heels of meetings EU Commission president Ursula von der Lyen had with prime minister Narendra Modi, external affairs minister S. Jayashanker and other high-ranking government officials.
"The EU is India's third most important trade partner and one of its main investors. And we can do so much more," said von der Lyen after her meeting with PM Modi. EU-India trade of goods is presently valued at nearly 56 lakh crore rupees.
"Our teams will soon begin negotiations on trade and investment agreements," von der Lyen added.
A joint statement issued by both sides said they "agreed that rapid changes in the geopolitical environment highlight the need for joint in-depth strategic engagement" and that the new council "will provide the political steer and the necessary structure to operationalise political decisions, coordinate technical work, and report to the political level to ensure implementation and follow-up in areas that are important for the sustainable progress of European and Indian economies."
The EU had set up a similar Council with only one country, the US. Just like India, there were major regulatory and other issues to be streamlined on various bureaucratic and political levels with the US also, necessitating the set-up of a Council which could speed up the process. It is hoped that a similar Council with India will help in removing the hurdles in the path of a free trade agreement, ranging from data privacy and digital regulations, climate change and labour standards. India-EU free trade agreement (FTA) discussions started way back in 2007, however faltered and was indefinitely put on hold by 2014 after India dilly-dallied on conforming to high European standards on pollution and labour welfare.
Since then, global changes have made both sides seriously consider a re-look. For India, refusing to be part of the China-dominated RCEP trade bloc means it needs to have alternate trade tie-ups in hand fast, as evidenced by recent tie-ups with UAE and Australia, to be followed soon by similar FTAs with Israel and the UK. The EU is not only a substantial trade bloc, but also an attractive source of funds India direly needs for its massive post-Covid infrastructure push.
The EU urgently wants fresh partners following the Ukraine war and its determination to cut energy ties with Russia. It also doesn't want to miss the bus as far as emerging markets in the east are concerned, considering the deep mistrust the western allies have of China. Post-Brexit UK's aggressive moves to fastrack an FTA with India—British PM Boris Johnson was in Delhi last week and expressed hope that the negotiations will be complete and India-UK FTA will be signed by Diwali – also makes it imperative that EU also get India, a one billion plus emerging market, on board.