India-EU deal: Ursula von der Leyen, President of the European Commission, said Tuesday that the European Union is just about ready to sign a trade deal with India. She called it a “first mover advantage” for the 27 EU countries.
This is happening while India’s trade agreement with the US is still up in the air. Meanwhile, the US has been threatening the EU with new tariffs over Greenland, and slapped a 50% duty on Indian goods last August.
India-EU ‘Mother of All Deals’: Historic Trade Pact Nears Signing
“I’ll head to India right after Davos next weekend. There’s still some work left, but we’re on the verge of a historic trade agreement,” von der Leyen told the crowd at Davos. “Some people even call it the mother of all deals. We’re talking about a market of two billion people, almost a quarter of the world’s GDP. And it gives Europe a head start with one of the fastest growing, most dynamic regions on the planet.”
She added that Europe wants to do business with the big growth engines of this century, from Latin America to the Indo-Pacific. “Europe will always choose the world, and the world is ready to choose Europe,” she said, taking a shot at the proposed US tariffs on the EU.
Both von der Leyen and Antonio Luís Santos da Costa, President of the European Council, will be the chief guests at India’s Republic Day celebrations next week. They’ll also co-chair the 16th India-EU Summit on January 27.
India’s Commerce Minister, Piyush Goyal, used the same phrase last week, calling the upcoming India-EU trade agreement the “mother of all trade deals.” He said the deal, expected to be signed on January 26, will be comprehensive and address the concerns of both sides.
Why the India-EU Deal Matters as US Tariffs Shake Global Trade
Just days before this free trade agreement is set to be signed, German Chancellor Friedrich Merz said Thursday that the “era of great powers” is the right moment for countries that believe in regulation to team up against protectionism and isolationism. In his speech at the World Economic Forum, he said he wants to see high growth in Europe and will do whatever it takes to get there.
The India-EU trade agreement has been a long time coming. The two nations have eventually reached a compromise of signing the agreement following the re-launch of talks in July 2022. Although the negotiations had initially started in 2007, they were sidelined in 2013.
But the negotiations appear to have accrued the urgency following the Trump administration alteration of its trade policies, increasing its protectionism, compelling trading partners to seek newer markets.
From Tariffs to Textiles: What the India-EU Trade Deal Means for India
The Chinese challenge has also been one of the main motivators of the trade deal. Indian industry also been facing pricing issues, particularly in an attempt to expand the solar energy industry. EU fears the near monopoly of China in the important technologies, because China occupies a leading position in global production in many areas, and the EU is prone to the risks.
Whereas India is seeking to access markets in the labour-intensive industries like textiles, footwear, gems and jewellery, the EU is likely to receive access in their automobiles and beverages.
India has the largest trade partner with the European Union, where bilateral trade in goods has been USD 135 billion in the financial year 2023 24. Trade ties are likely to improve greatly due to the free trade agreement.
One of the main issues that New Delhi has is various non-tariff barriers such as new carbon levies imposed on imported goods including steel, aluminium, cement, and industry analysts indicated that there was not much room to compromise.
The suggested accord will result in a qualitative shift in enhancing the overall bilateral relationship across various sectors when the world is experiencing trade shocks in consideration of the tariff policy by the US President Donald Trump.
The trade agreement would boost Indian exports, including textile and jewellery, the official said, should it be finalised and ratified by the European Parliament which would take at least a year. A group of negotiations resumed in 2022 after a nine-year hiatus, and made progress last year amid a surge of trade tensions.
