Ahead of India-EU 9th round FTA talks, EU envoy says political drive needed
European Union ambassador Hervé Delphin said the FTA talks will need a strategic and political drive as they are set to get harder
As India and the European Union (EU) prepare for the ninth round of negotiations on a free trade agreement (FTA), the talks will need a “strategic and political drive” as they are set to get harder, EU ambassador Hervé Delphin has said.
There has been positive momentum in two-way trade in goods, worth $135 billion during 2023-24, according to Indian commerce ministry’s figures, and a trade deal and an investment protection pact can take things to a new level, Delphin said in an interview.
“Eight rounds of talks have been held on the FTA and there is an understanding that both sides are committed to advance the negotiations with a ninth round already planned,” he said.
“Negotiations on [the FTA] will inevitably be harder as they touch upon important technical and commercial issues. The talks will need a strategic and political drive. A clear common strategic understanding can make the FTA fly. With the right level of political confidence and commitment, it will happen,” he added.
An official report from the EU on the eighth round of talks last month stated: “Some progress was made on Intellectual Property Rights, Rules of Origin, and Dispute Settlement, but both sides’ respective positions still diverge on the vast majority of key outstanding issues.” The ninth round is set to be held in New Delhi during September 23-27.
Pointing to two-way trade between India and the 27 EU members being greater than India’s trade with China and the US, Delphin said an FTA will open up opportunities for both sides. India-China bilateral trade was worth $113.83 billion in FY23, while India-US bilateral trade stood at $128.78 billion in FY23, according to official figures.
“There is potential to grow even further. This is where the FTA and an investment pact can unlock the potential to take mutual trade to a new level, trade that generates opportunities and benefits for Indian companies as much as European companies, and that generate jobs,” he added.
More than 4,500 European companies are present in India, providing 6.5 million direct and indirect jobs, and the EU currently ranks among the top three investors in India.
Despite the election in India, New Delhi remained engaged with the EU to enhance economic cooperation, expeditiously conclude an FTA and resolve environmental issues.
“Negotiators of both sides prepared grounds for the eighth round of talks right after the completion of the seventh round on February 27. Both sides held several meetings virtually on technical matters,” an Indian official said, asking not to be identified.
Even when the election was on, a meeting took place on May 7 between India’s commerce secretary and EU’s director general of trade, he said.
The eighth round of negotiations were held in Brussels during June 24-28, weeks after the new government was formed in New Delhi. More than 20 groups discussed technical barriers to trade, trade in goods, science and innovation, government procurement, trade remedies, digital trade, good regulatory practices, intellectual property rights and anti-fraud.
India raised the Carbon Border Adjustment Mechanism (CBAM), imposed by the EU on Indian goods based on their carbon footprint, at several meetings. “The issue was particularly discussed at talks between the commerce secretary and the EU director general on May 7,” the official said.
“While India will continue to oppose the EU’s move to impose a carbon tax or CBAM on various imports at multilateral forums, it is unlikely to affect the ongoing FTA talks,” a second official said, requesting anonymity.
However, Delphin said CBAM is “not an instrument of protectionism”. Describing this as a “misconceived fear”, he added: “If it had been conceived for protectionist purposes, it would have had a completely different design. But it is not the purpose of CBAM, which has been designed as part of our climate agenda of decarbonisation and sustainability.”
Indian industry is well informed about CBAM, and sees the opportunities arising from it, Delphin said. “EU states are net importers of products covered by CBAM, and will continue to be, though they need to be green imports. Decarbonisation will make Indian manufacturers more competitive,” he added.
The second official said India is committed to environmental protection and is doing more than it has committed at global forums. “But India is against making this part of trade commitments, which would be nothing but a non-trade barrier,” he said.
CBAM can lead to tariffs of up to 35% on high-carbon goods such as steel, iron ore and cement from India. EU officials have said CBAM will be implemented gradually, and their side is open to talks to address India’s concerns. Even as New Delhi opposes such measures being made part of trade deals, it is preparing its industry to make products with a low carbon footprint.
The tax, implemented in phases from October 1, 2023, will become fully effective on January 1, 2026.