India’s long-awaited free trade agreement (FTA) with the European Union comes at a time when global trade is at a critical juncture. In an exclusive interview to The Morning Standard, Commerce and Industry Minister Piyush Goyal tells Santwana Bhattacharya, Pushpita Dey and Dipak Mondal how the pact strengthens India’s negotiating power, expands export opportunities and embeds institutional safeguards—particularly for MSMEs—to address non-tariff barriers during implementation. Excerpts:
When you look at the India–EU FTA holistically, what does it represent for India’s position in the global economy today?
It takes India to a much higher level of global engagement and gives us a place at the high table among developed countries. The world today recognises that India, with its rapid growth, soon to become the third largest economy, and clearly positioned to become a $30 trillion-plus economy in the next 20 to 23 years, is an opportunity not to be missed. We have talent and skill, a youthful population, a vibrant democracy, and the rule of law.
This FTA reflects a deep partnership between the developed world and India. It will give us a strategic boost well beyond trade in goods and services—in investment, defence partnerships, mobility—and a stronger voice in multilateral organisations. The geopolitical outcomes of this visit and the conclusion of this FTA, along with other agreements we have signed, are significant.
After concluding eight FTAs, largely with developed economies, how has India’s negotiating confidence matured — and what lessons from previous negotiations influenced the EU deal?
This agreement was initiated in 2006, launched in 2007, and aborted in 2013. We were trying to protect one or two sectors that would not even have been harmed by this agreement.
Because of that failure to complete the agreement, many opportunities were lost. Our ability to move faster up the value chain, improve quality and skills, and expand our share in international markets was affected.
India today has a confidence that was not seen before. No country has become a developed economy by being inward-looking. We must explore global opportunities. All 37 countries covered by these eight FTAs complement us. What they offer, we need; and they need the labour-intensive products we can supply, creating new export markets, new exporters, millions of jobs.
What kind of export momentum do you see in the next five years, and which sectors will drive the growth?
The sky is the limit in terms of potential. We can aspire to expand our merchandise exports at a 10% growth rate. Once this FTA comes into effect, services could grow at a similar pace.
There are opportunities across textiles, apparel, home décor, auto components, automobiles, engineering products, pharmaceuticals, chemicals, medical devices, electronics, marine products and processed food. Our agri and marine exports have already crossed $55 billion. We should be able to double this to $100 billion, which would mean higher incomes for farmers and greater value addition. As quality improves for exports, Indian consumers also benefit.
India has shown willingness to open previously sensitive sectors like automobiles and alcoholic beverages. What gave the government this confidence?
It was naïveté earlier to misjudge what is sensitive. India exports $9 billion worth of automobiles, while imports are less than $1 billion. There is no threat. Manufacturing costs in Europe are too high. We’ve protected 90% of our domestic auto market. Small cars are not part of the deal. In the luxury segment, quotas are in place.
As for wine, only about 6,000 farmers grow grapes for wine, and the entire wine industry is worth about `1,000 crore. In contrast, we secured duty-free access for table grapes to the EU worth `1,000 crore.
Industry leaders — Tata Motors, Mahindra and Maruti — have welcomed the agreement. You must negotiate from a position of strength, not weakness.
Have we identified other sectors that can be opened up?
India is now part of all modern sectors. We are making semiconductors, renewable energy equipment, electrolysers, solar panels and windmills. We are producing high-quality electronic goods. Gone are the days when we made only elementary products. We are now making advanced goods and looking for export markets. We will import, we will export, we will acquire technology, and we will produce end products.
Europe has very high labour and sustainability standards. Can that be a challenge for labour-intensive sectors in India?
These standards apply to all. We already export $75 billion worth of goods to the EU, meeting those standards. If needed, we will learn and adapt to modern health and safety standards. Indian consumers will also benefit. We should celebrate good standards and quality instead of being wary of them. We are also implementing quality control orders. We recognise the importance of quality and sustainability. We are part of the ILO and committed to high labour standards and environmental responsibility. We should be proud of that.
If any such standards create difficulties, the agreement provides for a rapid response mechanism—first at the official level and then at the ministerial level—to resolve issues. The idea is to expand trade, not restrict it.
As non-tariff barriers often emerge during implementation, what mechanisms does the agreement create to address exporters’ concerns, especially for MSMEs?
Under our export promotion mission, we have a component to hand-hold MSMEs in meeting regulatory requirements. We will help them obtain approvals and support them financially so that they can access new markets and become exporters rather than remain only domestic producers.
Tamil Nadu and southern states have a strong export-oriented manufacturing base. How can these states position themselves to benefit from this FTA?
Tamil Nadu will gain significantly—in leather, engineering goods, electronics, automobiles, plastics, rubber products, handicrafts and GCCs in Chennai. MSMEs will benefit, new investments will come, and the ecosystem will strengthen.
Every state has been mapped, and there is not a single state that will not benefit from this agreement.
As part of a BJP-led government at the Centre, how do you engage with the economic and development aspirations of an Opposition-ruled state like TN?
The state government is not engaging adequately with the Centre or fulfilling technical requirements to access projects and funding. Better coordination would help the state realise the full benefits of such agreements.