India, EU aim to have FTA ready ahead of leaders' meet on Jan 27: Commerce secretary

The ongoing negotiations for a Free Trade Agreement (FTA) between India and the European Union represent a pivotal moment in their bilateral relationship, poised to reshape economic ties and strategic partnerships. An FTA is essentially a pact between two or more countries to reduce barriers to imports and exports among them, typically through the reduction or elimination of tariffs, quotas, and other trade restrictions. This initiative is not new; it carries a rich history of engagement, suspension, and renewed commitment.

**Background Context and Historical Journey:** The journey towards an India-EU FTA, officially known as the Broad-based Trade and Investment Agreement (BTIA), began in 2007. The initial negotiations, spanning 16 rounds, aimed to cover trade in goods, services, investment, and intellectual property rights, among others. However, these talks were suspended in 2013 due to significant differences on key issues, including tariff lines, market access for automobiles, wines and spirits, and data security. After nearly a decade of hiatus, both sides recognized the strategic imperative of reviving these discussions, especially in a changing global economic and geopolitical landscape. The decision to resume negotiations was formally announced in May 2021 at the India-EU Leaders’ Meeting in Porto, Portugal, and the first round of resumed talks took place in June 2022.

**Current Status and What Has Happened:** The recent reports indicate significant momentum, with India and the EU having successfully finalized 20 out of the total 24 chapters of the proposed FTA. This progress underscores a renewed spirit of cooperation and political will from both sides. The intensified discussions, including a recent visit by India's Commerce Minister Piyush Goyal to Brussels, highlight the commitment to iron out the remaining differences. The ambitious target is to conclude the deal before the leaders' summit scheduled for January 27, demonstrating a desire for swift implementation and a clear political signal of strengthened partnership.

**Key Stakeholders Involved:** Several crucial stakeholders are at play. On the Indian side, the **Ministry of Commerce and Industry** is the primary negotiating body, representing the interests of various sectors. **Indian businesses**, ranging from textiles, pharmaceuticals, IT services, and agriculture, stand to gain or face new challenges, making them critical voices. **Consumers** in India could benefit from a wider array of goods at potentially lower prices. For the EU, the **European Commission** spearheads the negotiations, guided by the collective interests of its 27 member states. **European industries**, particularly in manufacturing, technology, and luxury goods, view India as a massive, growing market. **EU consumers** might also see benefits from diversified imports. Beyond these direct actors, global trade bodies like the **World Trade Organization (WTO)** provide the overarching framework within which these bilateral agreements operate.

**Significance for India:** This FTA holds profound significance for India across multiple dimensions. Economically, it promises enhanced market access for Indian goods and services into one of the world's largest and wealthiest markets. Sectors like textiles, leather, engineering goods, and IT services could see a substantial boost in exports. This can lead to increased foreign direct investment (FDI) into India, fostering job creation, technology transfer, and greater integration into global value chains. Strategically, strengthening economic ties with the EU, a major geopolitical player, diversifies India's trade portfolio and reduces its reliance on specific regions, aligning with its broader foreign policy objectives of multi-alignment and strategic autonomy. It also supports India's vision of becoming a global manufacturing hub under initiatives like 'Make in India' and 'Atmanirbhar Bharat' by attracting investment and technology while opening up new export avenues. Socially, increased trade can lead to higher economic growth, potentially improving living standards and providing more employment opportunities.

**Constitutional Provisions and Policy Framework:** India's engagement in international trade agreements is rooted in its constitutional framework. **Article 253** of the Indian Constitution grants Parliament the power to make any law for implementing any treaty, agreement, or convention with any other country or any decision made at any international conference, association, or other body. This provides the legislative backing for enacting laws necessary to operationalize an FTA. Furthermore, **Article 73** outlines that the executive power of the Union extends to matters with respect to which Parliament has power to make laws, meaning the Union government has the authority to negotiate and sign such treaties. The **Foreign Trade (Development and Regulation) Act, 1992**, and India's **Foreign Trade Policy (FTP)**, periodically updated, provide the operational framework for India's external trade. The FTA will align with and influence the objectives set out in the current FTP, which aims to boost exports and integrate India further into the global economy.

**Future Implications:** Should the FTA be successfully concluded, it would mark a new chapter in India-EU relations. Bilateral trade, which stood at over $120 billion in goods in 2022-23, is expected to see a significant surge. It could also set a precedent for India's negotiations with other major economies. However, challenges remain, particularly in the outstanding chapters, which likely involve sensitive areas such as intellectual property rights, sustainable development clauses, market access for specific agricultural products, and services. The success of this FTA could bolster India's position as a reliable and attractive trading partner, enhance its economic resilience, and contribute to its goal of becoming a $5 trillion economy. Conversely, failure to reach an agreement could lead to missed economic opportunities and a slower pace of integration into key global markets, potentially pushing India to re-evaluate its trade strategies.