By Alexandra Brzozowski and Janos Ammann

(EurActiv) — After more than eight years of stalled talks on a comprehensive trade deal between the EU and India, the two sides are set to formally resume talks from mid-June, in the aim to strike a deal before heading to the polls in 2024.

Technical negotiations on 18 chapters of a future free trade agreement, a text on investment issues and another on geographical indications, are due to start on June 17 in Brussels, India’s commerce ministry said in a statement. .

“Both parties hoped to complete the deal before 2024. The pact will pave the way for India to boost trade with the 27-member EU bloc, subject to ratification by both parties, including including the European Parliament,” the statement said.

The renewed talks are expected to focus on industrial goods, agricultural tariffs and services, access to respective goods and services markets and government procurement, rules on intellectual property as well as commitments on sustainable development issues such as environmental, social and labor rights issues.

Although India’s population of nearly 1.4 billion is an attractive potential market, trade between the EU and India has always been low, with trade in goods reaching a total of €88 billion in 2021 and trade in services, 30.4 billion euros in 2020.

Prices, the main obstacle?

The EU is India’s third-largest trading partner, after the United States and China, while Delhi is only tenth on the list of the bloc’s largest trading partners, measured by the value of goods and exchanged services.

But expectations on both sides diverge on issues such as tariffs on cars, wine and dairy products imported from the EU, as well as visa liberalization for Indian professionals entering the EU.

“There are sectors with very, very high tariffs, including automotive and spirits,” said the deputy general manager of European Company, Luisa Santos told EURACTIV, referring to Indian import tariffs for cars which currently exceed 100%.

In other sectors, the tariffs may not be very high, but there are other taxes that prevent European companies from being competitive in India, she said.

But she says the juxtaposition of the liberal EU and protectionist India made it difficult to find common ground between 2007 and 2013, when trade talks began, and ambitions were deemed too far apart.

“Due to the diversity of interests of EU Member States, only a very comprehensive agreement removing a large part of customs duties and other barriers to trade and covering services and digital trade as well as other areas such as sustainable development and SMEs is likely to find an agreement among member states,” an EU official told EURACTIV.

According CompanyEuropethe reduction of tariffs but also regulatory cooperation are essential for the proper functioning of the agreement, for example with regard to data protection, sanitary and phytosanitary standards, as well as the mutual recognition of standards.

Moreover, European companies want to have access to public markets in India.

For India, on the other hand, the ability to export IT services and agricultural products, but also secure access for its industrial products are important, some of which have been affected by the regulations and standards of the EU.

But for Delhi it is also about technology cooperation and being recognized as a data secure country, which so far has not been the case under EU law and has prevented Indian companies from entering the EU market.

“Overall it will be a question of balance,” Santos told EURACTIV, stressing that this balance should be found quickly.

After 2024, the short window of opportunity may close as India and the EU hold elections.

Partners in a Changing World

With changing geopolitical circumstances and the withering of the multilateral global trading order, interests seem more aligned than ever.

In early 2021, the EU and India started a high-level trade and investment dialogue between European Commission Executive Vice-President Valdis Dombrovskis and India’s Trade and Industry Minister Shri Piyush Goyal .

In April, Commission President Ursula von der Leyen visited Delhi, where she announced the creation of a “Trade and Technology Council” and the resumption of free trade negotiations.

“We are taking steps to deepen our strategic ties with India – on trade, trust technology and security, including in relation to the challenges posed by rival governance models,” von der Leyen told Reuters. time, adding that it would help the EU economy to diversify and secure its supply chains.

The pandemic and the war in Ukraine have highlighted the vulnerability of European supply chains, be it Russian energy or Chinese tech products.

While the EU’s dependence on Russia is limited to the energy sector, ties with China run much deeper, raising the question of what would happen if tensions with the China were intensifying.

From Delhi’s perspective, a trade deal with Europe will boost Prime Minister Narendra Modi’s “Make in India” campaign and his ambition to establish India as a regional leader and global manufacturing hub.

Share values, at least a little

MEP Søren Gade, head of India’s delegation to the European Parliament and chairman of the Europe-India Business Council, told EURACTIV that the EU has “nothing in common with China, not a single value”.

In 2021, the ratification of an investment agreement between China and the EU was blocked by the European Parliament since some of its members had been sanctioned by China after criticizing Beijing’s oppression of the Uyghur minority.

A possible trade agreement with India should also be ratified by the European Parliament, which could bring the behavior of India’s Hindu nationalist government into question.

But Gade was convinced that a deal would be possible.

“India may not be a perfect democracy, but it is a democracy,” he said, arguing that India could help the EU diversify its risks away from China towards a partner who shares more of its values.

Another reason why the EU is seeking to renew its cooperation with India is its rather discreet reaction to the Russian invasion of Ukraine. The Indian military is known to be heavily dependent on Russian supplies and weapon systems, which the EU wants to counteract through closer economic cooperation.