India and the European Union, on Tuesday, announced the successful conclusion of negotiations for a major free trade agreement (FTA), touted as the "mother of all deals" by both EU Commission President Ursula von der Leyen and Prime Minister Narendra Modi. The deal is expected to reshape trade between the two economic giants and create a wave of opportunities for Indian students, professionals, and businesses, especially in sectors like textiles, leather, and jewellery.
Under the deal, over 99 per cent of Indian exports gain preferential entry into the EU, unlocking massive growth potential. The $33 billion of exports in labour-intensive sectors like textiles, leather, marine products, gems and jewellery are set to gain immensely from preferential access under the FTA.
Investment opportunities
The deal is expected to create huge trade and investment opportunities for Indian businesses and benefit MSMEs, women, youth, artisans, workers, students, skilled professionals, fisherfolk, farmers, and exporters. A number of domestic sectors, such as apparel, chemicals and footwear, will get duty-free entry into the 27-nation bloc, while the EU will get access to the Indian market at concessional duty for cars and wines.
Hailed by PM Modi as "the largest Free Trade Agreement in its history", the deal will offer India's farmers and small industries access to the European market, create new opportunities in manufacturing, and further strengthen cooperation between the services sectors.
The FTA will boost investment between India and the European Union, create new innovation partnerships, and strengthen supply chains globally.
The reciprocal market access in the EU will also open up opportunities for India-made automobiles.
Increased cooperation
Along with FTA, the two sides are also creating a new framework for mobility that will open up new opportunities for Indian students, workers, and professionals in the EU.
"We have long had extensive cooperation in science and technology. Today, we have decided to further strengthen these important linkages," the government stated.
The FTA also provides measures to tackle non-tariff barriers through strengthened regulatory cooperation, greater transparency, and streamlined customs, Sanitary and Phytosanitary (SPS) procedures, and Technical Barriers to Trade disciplines.
The EU will get access to 102 sub-sectors offered by India, bringing in high-tech services and investment into India from the EU, resulting in a mutually beneficial arrangement.
"India and the European Union's cooperation is a 'partnership for global good. We will expand trilateral projects, from the Indo-Pacific to the Caribbean. This will provide concrete support to sustainable agriculture, clean energy, and women's empowerment. Together, we will establish the IMEC (India-Middle East-Europe Economic Corridor) corridor as a key link between global trade and sustainable development," a statement from PM Modi said.
Cars to get cheaper
Premium luxury European cars, such as BMW, Mercedes, Lamborghini, Porsche, and Audi, are set to become cheaper in the Indian market when the bilateral free trade agreement comes into force, as India will offer quota-based import duty concessions under the pact, news agency PTI said, quoting an official.
The EU will eliminate duty in a phased manner for Indian automobiles, whereas India will reduce the levies to 10 per cent for specified numbers.
"The EU has got a very well laid out auto industry, one of the most advanced auto industries, and their cars are one of the best, and it is a reality...Taking note of sensitivity on both sides, we have agreed to a quota-based ecosystem, wherein we are trying to take care of each other's sensitivities," the official was quoted as saying.
According to the official, European car manufacturers will test the Indian market by setting up shops here. "...which will be win-win again, because they will not do 100 per cent on capital. They will have their supply chains from the EU. So, you will have some bit of value-add, we will have some bit of value-add."
'Unprecedented' market access
Union Commerce and Industry Minister Piyush Goyal claimed that India will get an "unprecedented" market access at concessional duties for over 99 per cent of its exports by value in the EU market.
Goyal said that the pact is a strategic breakthrough in the country's global trade engagement, unlocking vast opportunities in the $20 trillion EU market for 1.4 billion people. "It is a deal that gives unprecedented market access for over 99 per cent of our exports by value, providing a massive impetus to our labour-intensive sectors and bolstering Make In India," the minister said in a social media post.