As India and the EU celebrate 60 years of bilateral relations, new negotiations for a free trade agreement can achieve what proved impossible 9 years ago, media has said quoting Kathleen Van Brempt, Member of the European Parliament.
FTA negotiations between India and the EU started in 2007, but in 2013 they were suspended. However, MEP Brempt, in an article on Europe Asia Foundation, said that the ongoing negotiations between India and the EU will bear fruit.
India and the EU have been strategic partners since 2005. The COVID pandemic has posed great challenges. This has led to further expansion and diversification of supply chains. The global world order is also experiencing a change due to the war in Eastern Europe.
The world is witnessing an energy crisis and a food crisis. Climate change takes center stage. Due to all these problems, strengthening the ties between the EU and India becomes more crucial and meaningful.
An Investment Protection Agreement and Geographical Indications Agreement between India and the EU commenced in June 2022. This is an indicator of renewed political vigor on both sides to strengthen political and economic relations. Brempt says these moves on both sides are to be welcomed, Europe Asia Foundation reported.
There are many reasons why the EU should strengthen its ties with India. India is the world’s largest democracy and an important like-minded partner. It is located in the center of the strategically important Indo-Pacific region, close to Russia and China. India’s geopolitical relevance can hardly be overstated, Brempt writes in the article.
India is also the fastest growing emerging economy. There is a huge and dynamic market. According to the IMF, India’s annual GDP growth rate is over 8%. In terms of trade, India is the EU’s 10th largest trading partner. Similarly, the EU is India’s third largest trading partner.
Nearly 6,000 European companies are present in India. These companies provide 1.7 million direct jobs and 5 million indirect jobs in a wide range of sectors.
However, MEP Brempt writes that there is still a lot of untapped potential for India in European corporate value chains. With regard to market access, expectations diverge on both sides.
Currently, India imposes tariffs of 60-100% on important export products for the EU, such as wine and cars. In order to gain better market access, the EU will push for lower tariffs. For India, closer trade relations with the EU are part of its ambition to become a global manufacturing hub and regional leader.
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