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India, European Union may announce end of free trade agreement talks as key differences remain unresolved

A revival of the proposed Free Trade Agreement (FTA) between India and the European Union, negotiations for which have been stalled since 2013, was expected to begin this year. However, a report in The Times of India has said that both sides are on the verge of giving up on the FTA, and in a few days, might even formally state the end of the FTA talks. The report said that India wrote to the European Union, following which the latter sought two weeks to decide if they will go back to the negotiating table at all. However, it quoted sources as saying resumption of negotiations may be a fruitless exercise and it’s something both sides have come to realise.
Commerce Minister Suresh Prabhu had said in March this year that New Delhi was still hopeful that negotiations on the long-stalled talks would resume shortly. “We have started working on an India-EU FTA again. We have invited them and are looking at it,” he had said at a Confederation of Indian Industry (CII) event in New Delhi.
Prabhu rued that even after 16 rounds of talks, the negotiations hadn’t moved further. Negotiations have been held up since May 2013, as both sides are yet to bridge substantial gaps on crucial issues. The two sides tried in 2017 to restart negotiations at the India-EU summit in October, but it amounted to nothing.
The key differences arise over the movement of professionals. Besides demanding significant duty cuts in automobiles, the EU also wanted tax reduction on wines, spirits and dairy products, and a strong intellectual property regime.
On the other hand, India was seeking data secure nation status by the EU. The country is currently not among the nations considered data secure by the EU. The matter is particularly crucial as it will have a bearing on Indian IT companies wanting market access.
Two-way trade between India and the EU dipped to $88.4 billion in 2015-16 from $98.5 billion in the previous fiscal. Talking about the growing protectionism globally, Prabhu said that countries are reviewing and re-strategising their positions, but India has decided to engage positively with its trading partners.
However, things have clearly changed since then. The EU signed a massive free trade deal with Japan earlier this week that has slashed tariffs on a lot of items. The deal, as reported by CNN, covers 600 million people and almost a third of the global economy. Donald Tusk, European Union president, was quoted in the report as hailing the agreement as the ‘largest bilateral trade deal ever.’
And unlike Japan, European Union officials have lamented, India has not showed enough flexibility in negotiations. India, on the other hand, has accused the EU of being too rigid in giving access to services. In fact, The Times of India report said, the EU officials had told India in 2015-16 that they were too busy negotiating a TTIP with the US to have time available for New Delhi.
All of this has meant the India-EU trade relationship has hit a rocky patch. The Times of Indiareport quoted Indian negotiators as saying New Delhi might be better off waiting for Brexit to formally conclude before looking at ties with both UK and EU. With signs seemingly suggesting that Britain would be keen on working out a deal with India, New Delhi believes UK’s departure might make FTA talks with EU easier, the report added.