India and the EU to hold free trade deal talks in June and set target for 2023-2024

India and the European Union are expected to hold a first round of FTA negotiations in June, aiming to finalize a FTA by late 2023 or early 2024, EU Ambassador to India and Bhutan Ugo Astuto said on Friday.

India had started negotiations for a free trade deal with the 27-nation economic bloc in 2007, but talks stalled in 2013 as the two sides failed to reach agreement on key issues, including intellectual property rights, tariffs on cars and liquor, and the free movement of professionals. The two sides decided to resume negotiations in May last year.

At a news conference, Astuto said Indian and European officials had “set the parameters and a clear roadmap” for the negotiations. He noted that both sides expected an agreement ahead of the Lok Sabha elections in India and the EU Parliament elections, both scheduled for 2024.

Earlier this week, European Commission President Ursula von der Leyen visited India and met with Prime Minister Narendra Modi, President Ram Nath Kovind and Foreign Minister S. Jaishankar. The two sides agreed to set up a Trade and Technology Council, which will allow India and the EU to address trade, trusted technology and security challenges and deepen cooperation in these areas. The US is the only other country that has a similar agreement with the EU.

India increasingly views international trade as a key driver of economic growth. Earlier this year, it struck a comprehensive economic cooperation agreement with the UAE and an interim trade agreement with Australia. India is also in talks with Canada and the UK on free trade deals. During his visit to India last week, British Prime Minister Boris Johnson said the two countries want to finalize trade deal negotiations by October. India is currently seeking an “early harvest” or interim trade deal with Canada.

Explained

Third largest trading partner

India and the EU aim to conclude a free trade agreement by the end of 2023 or early 2024. This would be the most significant FTA for India as the EU is its third largest trading partner after the US and China.

Asked if India and the EU are considering an interim deal before finalizing a full FTA, Astuto said the two sides would only consider a comprehensive trade deal.

Bilateral trade in goods between India and the EU for the first ten months of FY2022 was approximately US$103.4 billion, with India exporting approximately US$57.0 billion worth of goods to EU member countries and goods in the Value of about US$46.4 billion imported from the EU. Outbound shipments to EU countries accounted for about 15.1 percent of India’s total exports during the April 2021-January 2022 period, while inbound shipments accounted for about 8.4 percent of imports.

Bilateral trade in services between India and the EU was worth €32.7 billion in 2020, with India exporting €17.3 billion worth of services and importing €13.1 billion worth of services. Data on bilateral trade in services for fiscal year 2022 is not available.

EDot: third largest trading partner

India and the EU aim to conclude a free trade agreement by the end of 2023 or early 2024. This would be the most significant FTA for India as the EU is its third largest trading partner after the US and China.

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