India-EU trade talks at ‘historic juncture’

EUropean unification leaders Ursula von der Leyen and Antonio Costa testament be chief guests at Republic daylight celebrations on jan 26, with bharat and the EU racing to finalise a free trade agreement in time for announcement at the bilateral summit the next day, as negotiations have reached what officials describe as a “historic juncture”.Commerce secretary Rajesh Agrawal on Thursday confirmed India is in the “last and the most arduous leg of negotiations” with the EU, with both sides working on a daily basis to resolve remaining issues and ready a draft of the proposed bilateral free trade agreement for the summit on January 27.“I’m happy to report that we are very close now. We have closed 20 out of 24 chapters completely. There are few issues which are still ongoing negotiations. We are virtually engaged on a day-to-day basis. We are trying to see if we can meet the timelines before our Leaders meet. That will be a good occasion,” Agrawal said.The external affairs ministry and the EU on Thursday formally announced the participation of the presidents of the European Council and the European Commission at the Republic Day, though this had been publicly acknowledged by leaders of several EU states in recent days. The two sides are currently engaged in last-mile negotiations to give shape to the free trade agreement (FTA) set to be unveiled during the India-EU Summit.This is only the second time that India has invited leaders of a grouping – after the Asean in 2018 – to be chief guests at the celebrations, an honour reserved for the country’s closest strategic and economic partners. The EU said this will be the first time the bloc’s top leaders have attended Republic Day parade celebrations as guests of honour, “signalling the strengthening of the bilateral relationship between the EU and India”.“India is a crucial partner for the EU. Together, we share the capacity and responsibility to protect the rules-based international order. This meeting will be a key opportunity to build on our partnership and drive progress in our cooperation,” Costa said in a statement.According to Agrawal, both sides are working towards meeting timelines before the leaders of the two sides meet. “We are making the right endeavour,” he said, indicating that the announcement in the last week of January would be subject to completion of the talks.Declining to comment on details of the negotiations, the secretary said the proposed agreement is comprehensive, which “covers all aspects” but both sides agreed to exclude “sensitive” agricultural items from the proposed pact. He was clarifying an international media report citing EU officials that the proposed pact will exclude agriculture.Commerce minister Piyush Goyal and his European Union counterpart Maroš Šefčovič have already prepared the groundwork. Both sides are giving top priority to the FTA with a raft of high-level visits and engagement.According to a person who asked not to be named, FTA talks have reached a “historic juncture” after 14 rounds of negotiations and several meetings over the last 42 months.Two people aware of the matter, speaking on condition of anonymity said that remaining issues to be resolved include the EU’s Carbon Border Adjustment Mechanism (CBAM).One of these people — cited above — said the two sides are engaged to find an amicable and mutually beneficial solution. “Various options are on the table,” one of them said, adding that this may also be resolved by next week before the EU leadership visits India.While India and the EU have made significant progress in negotiations in recent months, steel and automobiles, along with CBAM, continue to be among the key issues under discussion. Besides the FTA, the two sides are expected to finalise a Security and Defence Partnership and a security of information agreement to drive defence industry collaboration, maritime security cooperation in the Indo-Pacific, tackling of hybrid and cyber threats, and security of undersea critical infrastructure such as data cables.Costa and Von der Leyen will hold talks with Prime Minister Narendra Modi and meet President Droupadi Murmu. An India-EU Business Forum will be held on the margins of the India-EU Summit, the external affairs ministry said.The participation of the EU leaders at the 77th Republic Day and the India-EU Summit will further deepen the strategic partnership and advance collaboration in priority areas such as trade, security and defence, the clean transition and people-to-people cooperation, the two sides said.Disruptions and geo-economic churn created by the trade and tariff policies of the Trump administration in the US have added urgency to efforts to finalise the trade deal with the EU, negotiations for which were relaunched in 2022 after a hiatus of almost a decade.A second person who spoke on condition of anonymity said the 27-member European bloc is keen to diversify from both the US and China while seeking access to India’s huge market.India’s bilateral trade in goods with the EU was $137.41 billion in 2023-24, making the bloc the country’s largest trading partner for goods. India is the EU’s 9th largest trading partner, accounting for 2.2% of the bloc’s trade in goods in 2023. Bilateral trade in services in 2023 was estimated at $51.45 billion, according to Indian government data, while the EU valued two-way trade in services at €59.7 billion in 2023.India and EU also launched negotiations for a bilateral investment agreement and a pact on geographical indications in 2022, though the second person quoted above said these are unlikely to be concluded during the summit.India and the EU have been strategic partners since 2004, and the last bilateral summit was held virtually in July 2020. Bilateral ties have expanded and deepened across a wide range of areas, especially after the visit of the EU College of Commissioners led by Von der Leyen last February. It was during that visit that Modi and Von der Leyen set a target for concluding the FTA by the end of 2025.The second person cited above added the EU is also keen to work with India, the current chair of Brics, and France, the chair of G7, to play a greater role in shaping the global governance agenda at a time when the US is increasingly moving away from a leadership role on the international stage.