Significance and Challenges of the India-European Union Free Trade Agreement (FTA)
India and the European Union (EU) are negotiating a comprehensive Free Trade Agreement (FTA), often called the 'mother of all deals' due to the combined $24 trillion market size. The deal aims to eliminate duties on over 90% of India's export value, benefiting sectors like textiles, gems, and traditional medicine (AYUSH). However, significant hurdles remain, including the EU's Carbon Border Adjustment Mechanism (CBAM) and India's 'red lines' on sensitive agricultural products like beef and dairy. The agreement also seeks to improve India's investment climate to attract European capital and enhance bilateral services trade.
Key Points
- The FTA covers a combined market size of approximately ₹2,091.6 lakh crore ($24 trillion).
- The EU is expected to eliminate duties on about 70.4% of tariff lines immediately upon the deal's implementation.
- India has kept sensitive sectors like beef, dairy, and certain agricultural products out of the deal's scope.
- A major concern for India is the EU's Carbon Border Adjustment Mechanism (CBAM), which acts as a carbon tax on imports.
Exam Facts
- Bilateral merchandise trade between India and the EU stood at $136.54 billion in 2024-25.
- The deal aims for implementation in the calendar year 2026.
- AYUSH practitioners may be able to provide services in the EU under the new regulations.
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