After nearly 20 years of negotiations that were sporadic, India and the European Union announced an important free trade agreement. Both sides have called the agreement a historical moment which could change global trade.
Narendra Modi, the Indian prime minister, described it as India’s biggest and most significant free trade agreement so far.
This deal brings 27 European nations and the most populous country in the world together. Together, the 27 countries represent nearly a quarter of global GDP. They also have a combined market size of two billion.
The agreement allows for the free movement of most goods between India and EU. In order to reduce tariffs, the European Union is gradually removing them from exports of chemicals, machines. The automobile industry is one of the most significant changes.
India also plans to reduce the tariffs for European beer, wine and olive oil. Brussels claims that the agreement will increase investment, improve supply chains and allow businesses to access each other’s market easier.
India will have preferential access for almost all its exports to the EU. Textiles, leathers, marine products and handicrafts will benefit. Exports of agricultural products such as coffee, tea, spices and processed food will benefit from improved access to the market.
India also protected its domestic sensitive sectors. To balance the growth of exports with local demands, India has protected certain fruits, vegetables, dairy products, cereals and poultry.
It is important to note the timing of this deal. The United States is exerting economic pressure on both India and the EU.The EU is dealing with tensions over trade.
The deal, say experts, could benefit industries in India that require a lot of labour, such as shrimp farming, textiles and jewellery. However, challenges remain. The EU’s environmental and regulatory standards will require India to quickly adapt to them.
India and the EU have also made progress in other areas, such as security, climate change, defence, and cooperation.
The talks include discussions on maritime security, cyber-threats, and strengthened defence supply chains.
