After a nine-year hiatus, India and the European Union have formally re-launched their free trade agreement talks aiming to conclude it by the end of 2023.

At a joint event held at the headquarters of the European Union (EU) in Brussels yesterday, Union commerce and industry minister Piyush Goyal, and Valdis Dombrovskis, Executive Vice-President of the European Commission, formally began negotiations on the India-EU Free Trade Agreement (FTA).

The two sides also began talks on a stand-alone Investment Protection Agreement (IPA) and a Geographical Indicators (GIs) Agreement, a commerce ministry statement released on Saturday said.

The first round of negotiations covering the three areas of work will be hosted by India in New Delhi from June 27 to July 1. The two sides agreed to fast-track the talks and hoped to conclude them by the end of 2023, officials said.

“We have our teams in place...It will further strengthen our relations. Our bilateral trade has grown significantly in the last few months...There is a significant untapped potential which we will hope to unleash with the execution of these three agreements -- trade, investment and GIs,” Goyal said in Brussels.

India had started negotiations for a trade pact, dubbed the Bilateral Trade and Investment Agreement, with the 27-country economic bloc in 2007.

But the talks stalled in 2013 as both sides failed to reach an agreement on key issues including customs duties on automobiles and spirits, and the movement of professionals.

Who stands to benefit

Indian manufacturers of labour-intensive items such as textiles, leather, sports goods, and processed food, are expected to benefit from the proposed FTA as elimination or reduction in duties by the EU on these items will bring Indian exporters at par with those from countries like Bangladesh and Vietnam.

India also hopes to persuade the EU to make its visa rules more flexible for its professionals and workers.

The EU is seeking lower import duties on automobiles and wines and spirits in addition to a range of other manufacturing and agricultural products. It is also keen to gain greater access to India’s burgeoning financial services market. This would be one of the most significant FTAs for India as the EU is its second-largest trading partner after the US.

Two--way merchandise trade with the EU registered an all-time high value of $116.36 billion in 2021-22, recording year-on growth of 43.5 per cent. India’s export to the EU jumped 57 per cent in FY 2021-22 to $65 billion. India has a trade surplus with the EU.

Considering that both partners have similar fundamental values and common interests and are two of the largest open market economies, the deal will help to diversify the supply chains, boost economic opportunities for their businesses, and bring significant benefits to the people.

Pact Points

• Indian manufacturers of textiles, leather, sports goods and processed food are expected to benefit from the proposed FTA

• India also hopes to persuade the EU to make its visa rules more flexible for professionals and workers.

• The EU is seeking lower import duties on automobiles and wines and spirits