Political Guidance Needed For Meaningful India-EU Free Trade Pact, Says Piyush Goyal

Commerce and Industry Minister Piyush Goyal recently met the Ambassadors of the European Commission delegation and EU member states to discuss the ongoing Free Trade Agreement negotiations between India and the European Union.

Goyal emphasised that both India and the EU were striving for a balanced, ambitious, and comprehensive FTA that would be mutually beneficial. After nine rounds of discussions, Goyal stressed the need for political guidance to ensure a commercially meaningful agreement, while respecting the sensitivities of each side. Any sustainability discussions must be based on the principle of Common But Differentiated Responsibility, considering the different developmental paths of both economies, he emphasised.

Goyal highlighted India’s strong growth trajectory, with the economy expected to expand by 7-8% annually, propelling India to become the third-largest global economy in the coming years. He projected that India’s GDP could reach $35 trillion by 2047, signaling rapid growth and untapped potential for further trade with the EU.

Both sides acknowledged the significant economic benefits of integrating their economies and strengthening supply chain resilience.

India’s trade with the European Union has grown substantially, with bilateral trade in goods reaching $137.41 billion in financial year 2024, making the EU India’s largest trading partner for goods. Additionally, trade in services between India and the EU was estimated at $51.45 billion in 2023. Goyal noted that a successful trade agreement with the EU would help India diversify and expand its exports of goods and services while securing its value chains.

The FTA is seen as a strategic step in India's efforts to strengthen its position in global trade, by forging balanced agreements with major world economies. The potential deal is expected to enhance market access and promote economic growth for both India and the EU, which share common interests in technology, trade, and supply chain resilience.

Earlier this year, Goyal also addressed concerns regarding the European Union’s proposed Carbon Border Adjustment Mechanism during his speech at the Raisina Dialogue 2024. He stated that India would strongly take up the issue of carbon taxes with the EU, aiming to address it in a fair and transparent manner.

The CBAM, set to come into effect from January 2026, will impose a tax on imports from carbon-intensive industries such as steel, cement, and aluminum, potentially impacting Indian exports to the EU.

Goyal made it clear that India would respond to any challenges posed by such non-tariff barriers in accordance with international trade rules. He asserted India would take countermeasures where necessary and engage in discussions to resolve issues bilaterally. India’s exports to the EU, particularly in sectors like steel, iron ore, and aluminum, which account for a significant portion of its exports, are expected to be affected by the new carbon tax.