• India and the European Union celebrated 60 years of relationship with the relaunch of talks on a bilateral trade agreement.
• Brussels visit of the Indian Union Minister for Commerce and Industry has added momentum to the negotiations and provided India with a platform to work with the EU to resolve market access barriers.
• India offers EU investors an attractive alternative market to China.

India-EU Trade

Importance of the EU for India:

• The EU is India’s third largest trading partner, accounting for 10.8% (around €88 billion) of our total trade in goods.
• Trade between both rise by about 30% in the last decade.
• The EU is a key export market for India’s agri-food products.
• India has a positive trade balance with the EU.
• Food Trade:
• Food exports from India to the EU: increased from $2.65 billion in 2011 to $3.01 billion in 2021.
• Food imports from the EU to India: increased from about $410 million in 2011 to some $920 million in 2021.

• Trade in Services: It was around €30.4 billion in 2020.
• Foreign investment from EU to India: €87.3 billion (2020).
• Over 6,000 European companies are present in India, which has led to significant employment creation in the country.

Importance of India for the EU:

• India is the EU’s 10th largest trading partner.
• India accounts for 2.1% of the EU’s total trade in goods.
• However, India is well behind China’s 16.2% and the US’s 14.7%.

Issues between India and the EU:

• There are differences between India and the EU over several issues:
• Content of an investment agreement
• Intellectual property rights
• Tackling climate change challenges
• EU businesses have raised high-tariff-related concerns in Indian sectors like dairy, alcoholic beverages and automobiles and auto components.
• Indian businesses are worried about regulatory issues such as technical standards and the EU’s carbon tax.
• The India-EU Trade and Technology Council (TTC) could serve as a platform to address some of these.

How India and the EU can resolve trade issues?

• India and the EU are participating in trade discussions in multiple forums, including the World Trade Organization (WTO) and G20.
• Union minister’s visit affords an opportunity to identify areas of common interest and for India to get EU support on its G20 priority areas, like:
• Making trade more inclusive and growth-oriented for developing countries,
• Building resilient global value chains (GVCs),
• Integrating micro, small and medium enterprises (MSMEs) in global supply chains by using digital platforms,
• Logistics for trade, and
• WTO reforms.

WTO reforms:

• In the specific context of WTO reforms, India and the EU have already agreed to work together on common priorities covering issues like its dispute resolution mechanism, subsidies on agriculture and fisheries, and an e-commerce moratorium.
• Both sides recognize the need to build on their common goals to pursue consensus-based solutions that would support livelihoods and nutrition security for millions in India and other developing countries.
• If India and EU work together, they may be able to reach a consensus on many issues at the next WTO Ministerial Conference.

Areas of Trade Enhancement

• There are multiple areas where bilateral trade and investment flows can be enhanced. For example:
• Joint-capacity building programmes for supporting MSMEs integration with GVCs;
• support to startups in each other’s market;
• joint research, innovation and skilling programmes;
• collaboration and joint projects on sustainable food systems will all help enhance bilateral trade and investment flows.
• Collaboration between regulatory bodies and mutual recognition agreements will help address several issues related to technical standards and the mobility of professionals.
• India may explore the scope for collaborations to attract more tourists from the EU, enhance exports of organic products and traditional medicine as organic food, Yoga and Ayurveda gain popularity in the EU.

There is scope for attracting investment and learning from the best practices of the EU. As India embarks upon creating a resilient and efficient logistics ecosystem and promoting seamless multimodal international transportation under PM Gati Shakti and the National Logistics Policy of 2022.