As New Delhi gears up for the 15th India-EU summit tomorrow, the need for a trade deal between the two sides looms large. In fact, commerce and industry minister Piyush Goyal recently said that India has restarted trade talks with the EU for a preferential trade agreement, with the ultimate goal of actualising a free trade agreement. It will be recalled that negotiations for a bilateral trade and investment agreement between India and the EU were suspended in 2013 as the two sides had hit a dead end on issues such as tariffs on European cars and wine, data security and India’s pitch to include services and more visas for Indian professionals in the agreement.
Since then several attempts have been made to get the talks going, but they have all failed to generate momentum. Among the roadblocks was India’s decision to cancel bilateral investment treaties with 22 EU countries in 2016. This slowed interest from European companies, who did not want to risk investing unless a solid investment protection agreement was put in place. But having already pulled out of the Regional Comprehensive Economic Partnership agreement last year over fears of China dominating that trade grouping, India has to do trade deals elsewhere if it seriously wants to entrench itself in global supply chains.
Sure, a trade deal with the US will be big. But given the transactional mood of the Trump administration, progress here will be difficult. Which is why a trade deal with the EU – and a separate one with the UK – becomes important. Besides, both India and the EU today are concerned about China’s predatory trade and investment practices and are taking steps to counter them. This should create enough synergy to deliver an India-EU trade accord without getting sidetracked by local lobbies and vested interests.
This piece appeared as an editorial opinion in the print edition of The Times of India.