Following the 14th round of negotiations in Brussels, officials optimistic about finalising pact; while bilateral trade reached €120 billion in 2014, challenges remain over tariffs, sustainability, and carbon regulations; another round of talks is expected to be held in New Delhi in November
Sriram Lakshman BRUSSELS
Indian and European Union officials remained confident that a trade deal between the two sides could be concluded by the end of the year, as the 14th round of negotiations drew to a close on Friday in Brussels.
“I can’t imagine a scenario where we’re not close to or have not concluded the FTA at the end of the year,” an EU official, who did not want to be named, told The Hindu.
Rajesh Agrawal, who has thus far led the negotiations with the U.S. and taken over as Commerce Secretary on October 1, was in Brussels this week, and left the city on Friday evening. The Hindu understands that with Mr. Agrawal’s appointment as Commerce Secretary, the Ministry’s Darpan Jain will lead India’s negotiations with the U.S., with Mr. Agrawal still having a very hands-on role in those talks.
The Indian negotiating team for the EU is led by L. Satya Srinivas. Another round of talks is expected in New Delhi in November but discussions will continue in the interregnum.
Bilateral trade in goods in 2024 stood at €120 billion ($139 billion) but difficulties remain and both sides complain of tariff and non-tariff barriers. Challenging areas have included services, agricultural and dairy sectors, pharma, automobiles, and wines and spirits. The sides have decided to set aside the most sensitive areas from the negotiations.
Political mandate
While officials are under a political mandate set by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen in February this year to conclude an agreement by the end of 2025, some of these tough issues remain, including “trade and sustainable development”.
India has for long objected to the EU’s Carbon Border Adjustment Mechanism (CBAM). The tax, which seeks to price emissions released during the production of goods, including imports, is due to come into full effect on January 1, after a two-year transition period.
Commerce and Industry Minister Piyush Goyal has repeatedly said that India will retaliate if its products are subject to the mechanism. Mr. Goyal had warned, in a speech in New York at the end of September, that the CBAM “trap” could isolate Europe and cause inflation there. The government has also objected to bundling climate action with trade.
The issues around the CBAM and sustainability were very much still under discussion as of Friday afternoon, The Hindu learned from a source with direct knowledge of the negotiations.
The EU would need to adjust its approach on trade and sustainable development so the outcome is “something India can live with”, Chief Negotiator Christophe Kiener had told the European Parliament’s trade committee on September 25, saying a chapter on trade and sustainable development will still, however, be needed. Mr. Kiener had also said that while the sides had not made progress in the 13th round in New Delhi, they had improved their understanding of each other. Towards the end of such negotiations “things are bound to be difficult”, Mr. Kiener had said.
For the EU, India’s Quality Control Orders (QCOs) are among the oft-cited difficulties.
India’s Ambassador in Brussels, Saurabh Kumar, is optimistic about the trade talks.
“It is not a single point or one particular aspect that has overarching weight. Trade negotiations by definition are not easy and there are difficulties, but both sides are committed to it [the FTA] and determined to complete it,” Mr. Kumar told The Hindu, adding, “There is a strong political directive to complete discussions by December.”
Mr. Goyal is expected in Brussels at the end of the month.
IMEC ‘Sherpa’ meet
Brussels has been busy this week, with more than just trade. The Global Gateway Forum (the bloc’s strategy for investment in other jurisdictions) was also held this week along with a steering meeting (i.e., a ‘Sherpa’ meeting) for the India-Middle East-Europe Economic Corridor (IMEC). Deputy National Security Adviser Pavan Kapoor, who represented India at the meeting, participated virtually.
With a ceasefire kicking off between Israel and Gaza and the possibility of less fighting in the future, Brussels is keen on the project that was announced at the G-20 Summit in New Delhi in September 2023.
Key corridor
The corridor, when built, will provide transport, fibre optic and energy routes from India to Europe via West Asia.
“We are very keen on it, and the Indians are very keen on it, as are others. And we have these various investments we’re making to support legs of it. The key thing is the Middle East being sorted out,” the EU official said, adding that Washington’s attention to the issue was still necessary.
“We need the oomph of the Americans as well,” the official said.
Asked if there was any specific limiting factor to operationalise the IMEC project, Mr. Kumar said the countries involved in the project were now identifying their responsibilities.
“There is no limiting factor. The countries involved are trying to organise themselves as to how they are to move ahead and who looks after which aspect,” he said.
