At the European Union–India summit held in New Delhi today, 27 January, agreement was reached on a trade partnership as well as a security and defence partnership.
According to Foreign Minister Margus Tsahkna, the summit resulted in a political agreement on the principles of an EU–India free trade agreement, which will ensure better access for the European Union to the Indian market. “We are talking about a rapidly growing market with a GDP of approximately €3.4 trillion. This will help reduce dependence on the Chinese market and counterbalance protectionist tendencies in the United States,” Tsahkna said.
He noted that the agreement will give European companies a clear competitive advantage compared with third countries that do not have a free trade agreement with India and therefore face higher tariffs and technical barriers.
Agreement was reached on extensive tariff reductions in market access for goods. This deal is eliminating or reducing tariffs in value of 96.6% of EU goods exports to India, which will save nearly €4 trillion a year in tariffs. The European Union will eliminate a large share of tariffs immediately, while India will do so gradually over a period of 7–10 years.
Once the free trade agreement enters into force, a common market will be created covering nearly 2 billion people and approximately 25% of the global economy. Trade relations between the European Union and India have grown by around 90% over the past decade, reflecting both India’s economic growth and the EU’s desire to diversify its supply chains.
The final signing of the agreement is expected to take at least a year, and following signature the agreement must be approved by the European Parliament and ratified by the parliaments of the member states. “As we saw with the Mercosur agreement, the process may still give rise to political debate. In India’s case, this is primarily because the agreement is clearly asymmetrical in terms of the balance of rights and obligations, tilting in favour of India as a developing country,” Tsahkna said. The first tangible economic effects are therefore expected no earlier than 2027.
The summit also resulted in agreement on a security and defence partnership, creating a framework for more strategic cooperation in the areas of maritime security, cyber defence and counter-terrorism. “The signing of the security and defence partnership is a clear sign of the growing strategic partnership between Europe and India,” Tsahkna noted. According to him, the agreements will support security and economic prosperity in both regions.
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