India and the European Union (EU) are aiming to conclude the first tranche of a bilateral Free Trade Agreement (FTA) by July this year, and have intensified the pace of negotiations for it, a senior official said Wednesday.
“We are looking for an early harvest. We are trying to do it as early as possible..targeting (to finalise the early harvest) by July,” the official added.
A team of Indian officials on the India-EU FTA led by the chief negotiator Satya Srinivas has leaft for Brussels to pick up the thread of dialogue from where it was let off on Friday. Last week, India and the EU held the 11th round of negotiations in New Delhi and within a week of that, the Indian team is to be in Brussels, underscoring the urgency and fast-paced progress of the talks.
Apart from the key issue of tariffs on trade of goods, the early harvest will encompass solutions to issues of non-tariff barriers, government procurement, intellectual property rights, trade remedies, rules of origin, as well as sanitary and phytosanitary measures, the source said.
These issues have been identified as core issues of the FTA by both sides. The full-fledged trade agreement has 23 chapters that include issues like trade and sustainable development, transparency, good regulatory practices, subsidies and anti-fraud among others.
The early harvest deal with the EU would then be converted into a full-fledged FTA after further negotiations. In February-end European Commission’s (EC) president Ursula von der Leyen and a full college of commissioners had visited India for detailed talks on the entire spectrum of the relationship. At the meeting between EC President Narendra Modi the year-end deadline to conclude the FTA was fixed.
Due to the tight deadline and time being taken to get to the common ground on non-core issues, both sides agreed to conclude the FTA in phases. Another push came from the change in the global trade environment after US President Donald Trump announced sweeping changes in tariffs giving rise to uncertainty all across the world.
To create cushions against the disruptions of global trade war, countries are speeding up agreements. The conclusion of India-UK trade talks early this month also gives a push to the negotiators and key issues involved on both these agreements are similar. In fact in the earlier attempt at India-EU the UK was negotiating as part of the 27-member group. Then Brexit happened and the UK officially left the EU in 2020. Fresh start was made for the FTA with the two in 2022.
The key ask for India from the EU in its negotiations is zero tariffs on labour intensive exports and greater access to the services market of 27-member grouping.
The EU is pushing for India to cut tariffs on cheese and skimmed milk powder, which India currently shields through high duties to protect its domestic dairy industry. Indian officials say that they would be unwilling to provide concessions in dairy in any of the FTAs.
European winemakers are pushing for greater access to the Indian market, where imported wines currently face a 150% tariff. European car manufacturers want India to cut import duties on completely built-up (CBU) vehicles to 10-20%, down from the current 70%.
Similar issues have been tackled by India and UK in their FTA. India has agreed to slash the duties in whiskey and gin to 75% from 150% before reducing to 40% by year ten of the deal, while automotive tariffs will go from over 100% to 10% under a quota. India has got duty free access to 99% of its exports to the UK under the agreement.
The EU is the largest trading partner for India after the US. In April-February of last financial year India’s exports to the EU stood at $ 69 billion while imports were $ 54.6 billion.