Meanwhile, India is trying to maintain momentum on its own free trade talks with the EU. The hope is that a detailed agreement can be wrapped up by year’s end. This new initiative comes on the heels of a big milestone. Last year alone, we ratified our largest bilateral free trade agreement with the European Free Trade Association (EFTA) worth more than $100 billion. And global trade dynamics are changing, not least thanks to the imposition of U.S. tariffs. On the flip side, India would love to deepen its economic relations with Europe.
Indian Commerce Minister Piyush Goyal made a pretty big announcement. He mentioned that they have already completed 60-65% of the chapters in the trade agreement with the EU. This achievement is a significant step forward for the bilateral negotiations that began again in 2021 after a nearly 40-year break. We are thrilled that tremendous bipartisan work is helping bring the last elements of a federal agreement into place. This agreement is poised to further strengthen their trading relationship.
As a bloc, the EU is India’s largest trading partner in goods. In FY2022-23, bilateral trade really took off to an all-time high of $135 billion (£107 billion). In fact, this India-EU trade has almost doubled in the past decade, showing how closer India-Europe ties are increasingly an economic imperative. At present, EU companies’ over 6,000 direct affiliates in India play an important role in generating employment and environmental creation jobs, facilitating technology transfer.
Even with all of that, the urgency of these negotiations has been highlighted by recent international events. U.S. President Donald Trump has recently raised tariffs on Indian goods entering the U.S. to 50%. This carries with it a massive 25% penalty directed solely at trades with Russia. President Trump has been pressuring the European Union to place 100% tariffs on Indian imports. His hope is that this will help create new layers of pressure on Russia amid a historic period of geopolitical strife.
In view of the above-mentioned pressures, India wants to ensure the best possible terms while defending its economic needs. The country continues to loudly profess its dedication to transparency and getting the best deals on oil. This new approach better meets the needs and aspirations of its 1.4 billion citizens.
EU Commission Chief Ursula von der Leyen is optimistic that they will conclude the free trade agreement by year-end. She speaks to its importance as the largest trade deal ever concluded to date. A 28-member delegation from the European Union’s Political and Security Committee (PSC) recently visited India. They are eager to speak on important foreign policy, security, and defense issues, which only increases the momentum toward a deal.
The strategic significance of our partnership goes well beyond economic concerns. Recently, India and the EU conducted their first coordinated naval exercise in the Indian Ocean, aimed at enhancing maritime security in the region. This partnership signals a positive step towards the two countries’ ongoing dedication to realizing mutual security interests and continuing to strengthen their shared values.
As negotiations continue, both India and the EU stand to gain considerably from a completed trade agreement. The potential for increased trade flows could lead to enhanced economic growth and stronger diplomatic ties between the two entities.