NEW DELHI: India and the European Union (EU) have successfully concluded negotiations for the proposed free trade agreement, Commerce Secretary Rajesh Agrawal said on Monday.
He said the trade deal, from the Indian perspective, is balanced and forward-looking, which will help in better economic integration of India with the EU. It is expected to propel trade and investments in both economies.
“Negotiations have been successfully concluded. The deal has been finalised,” Agrawal said.
Legal scrubbing of the FTA text is underway, and efforts are being made to complete the remaining processes and sign the pact at an early date. The deal is expected to be signed this year and may come into effect early next year.
Implementation of the deal will take time, as it requires approval from the EU Parliament, while in India, only the nod of the Union Cabinet is needed.
The pact has been finalised after 18 years of negotiations, with talks initially launched in 2007. Commerce and Industry Minister Piyush Goyal has described this free trade agreement (FTA) as "the mother of all deals" the country has signed so far.
The FTA is likely to provide duty-free access to a number of Indian goods from labour-intensive sectors such as textiles, chemicals, gems and jewellery, electrical machinery, leather, and footwear. The EU's tariffs on Indian goods are about 3.8 per cent on average, with labour-intensive sectors attracting about 10 per cent import duty. India’s weighted average duty on EU goods is about 9.3 per cent, with particularly high duties on automobiles (35.5 per cent), plastics (10.4 per cent), and chemicals and pharmaceuticals (9.9 per cent).
In an FTA, both sides reduce or eliminate import duties on over 90 per cent of goods traded between them. The pact also liberalises norms to promote trade in services sectors such as telecommunications, transportation, accounting, and auditing.
The conclusion of the negotiations comes ahead of the India–EU summit, where the free trade agreement, along with a strategic defence pact and a mobility framework, is expected to be key outcomes.
An announcement on the conclusion of talks on the ambitious free trade deal and finalisation of the strategic defence pact as well as the mobility framework are set to be the main deliverables at the India-European Union summit talks on Tuesday.
Prime Minister Narendra Modi will host European Commission President Ursula von der Leyen and European Council President Antonio Costa at the summit that is expected to produce a broader vision by the two sides to navigate the geopolitical flux triggered by Washington's policies on trade and security.
Costa and von der Leyen graced the 77th Republic Day celebrations at the Kartavya Path as chief guests.
"A successful India makes the world more stable, prosperous and secure. And we all benefit," Von der Leyen said on Monday.
The top EU leader last week said India and the European Union are on the cusp of a "historic trade agreement" that would create a market comprising two billion people, accounting for almost a quarter of the global GDP.
The EU and India had first launched negotiations for the free trade agreement in 2007, before the talks were suspended in 2013 due to a gap in ambition. The negotiations were relaunched in June 2022.
The FTA is expected to bring a qualitative change in deepening the overall bilateral ties in a range of sectors.
The broad focus of the summit will be on trade, defence and security, climate change, critical technologies and strengthening the rules-based global order.
Besides firming up the free trade agreement, the two sides are set to unveil a defence framework pact and a strategic agenda at the summit.
India and the European Union have been strategic partners since 2004.
The proposed Security and Defence Partnership (SDP) will facilitate deeper defence and security cooperation between the two sides, officials said.
The SDP will bring interoperability in the defence domain and will open up avenues for Indian firms to participate in the EU's SAFE (Security Action for Europe) programme.
The SAFE is the EU's Euro 150 billion financial instrument designed to provide financial support to member states to speed up defence readiness.
At the summit, India and the EU are also set to launch the negotiations for a Security of Information Agreement (SOIA).
The SOIA is expected to boost industrial defence cooperation between the two sides.
The memorandum of understanding on facilitating the mobility of Indian workers to Europe is expected to be another key outcome of the summit.
It will provide a framework for advancing mobility initiatives by EU member states with India, the officials said.
France, Germany and Italy are among the European nations that have migration and mobility partnerships with India.
The two sides are also expected to ink a number of agreements to provide for deeper cooperation in several other sectors.
They are also likely to deliberate on the pressing global challenges, including the Russia-Ukraine war.
While the two sides don't see eye-to-eye on everything, they do share a core set of interests which include having a stable international order, European officials said last week.
The summit will also be an opportunity to discuss with India "Russia's war of aggression against Ukraine", they said.
President Costa will reiterate the message that this war represents an existential threat for Europe and poses a direct challenge to the rules-based international order and that it has clear consequences also in the Indo-Pacific, the officials noted.
The ties between India and the EU have been on an upswing over the last few years.
The EU, as a bloc, is India's largest trading partner in goods. For the financial year 2024-25, India's total trade in goods with the EU was worth about USD 136 billion, with exports around USD 76 billion and imports at USD 60 billion.