The EU-India FTA declaration represents a pragmatic geopolitical pivot, balancing economic liberalization with strategic autonomy amid global protectionism. Economists project €30 billion in combined annual export gains, while scholars highlight risks from non-tariff barriers like the EU's Carbon Border Adjustment Mechanism (CBAM).
Scholar Perspectives
Scholars from Carnegie Europe view the FTA as a "tandem" alignment, enhancing EU-India tech and investment ties while diversifying from China. They note exclusions in agriculture and dairy reflect India's red lines on food security, but warn of ratification delays via EU Parliament and Court of Justice reviews.
Economist Views
Allianz economists forecast EU exports to India rising +46% with full tariff elimination, adding 0.14pp to EU GDP yearly; India gains €11.7bn in new trade, offsetting US tariff losses by 25%. Trade asymmetry persists—India's EU surplus at $25.8bn vs. US $45.8bn—with EU facing India's 9.6% weighted average tariffs.
## Essential Statistics
- Bilateral goods trade: €120bn (2024), up 90% in decade; services add €60bn.
- Combined GDP share: 25% global; trade bloc: 2bn people, 1/3 world exports.
- Tariffs cut: 96.6% EU goods to India (up to 44% machinery); 99% Indian exports to EU; saves €4bn duties yearly.
- India's EU rank: Largest partner (11.5% total trade);
- EU's 9th (2.4%).
Key Jargon
- *FTA*: Free Trade Agreement—preferential tariffs beyond WTO MFN (Most Favoured Nation).
- *NTBs*: Non-Tariff Barriers (e.g., standards, CBAM—EU carbon tax on imports).
- *GSP*: Generalized System of Preferences—EU scheme India lost in 2023, raising tariffs 10-20%.
- *GI*: Geographical Indications—protects products like Odisha's Sambalpuri saree.
- *RoO*: Rules of Origin—criteria proving goods qualify for FTA benefits.
## UPSC Prelims Questions
*Q1.* Recently, India signed a landmark FTA political declaration with which bloc, covering 25% of global GDP?
(a) ASEAN (b) EU (c) QUAD (d) RCEP
*Ans:* (b) EU
*Q2.* What is the approximate bilateral goods trade value between India and EU in 2024?
(a) €60bn (b) €120bn (c) €200bn (d) €300bn
*Ans:* (b) €120bn
UPSC Mains Questions *Q1 (GS-3, 150 words):* Analyze the economic and strategic significance of the EU-India FTA for India's global trade positioning. Discuss potential challenges in implementation.
*Model Ans:* The EU-India FTA, concluded after 18 years, creates a 2bn-person market slashing tariffs on 96%+ goods, boosting India's textiles/pharma exports (€11.7bn gain) and EU machinery inflows. Strategically, it counters China dependency, enhances supply chains amid US tariffs. Challenges: NTBs like CBAM, agri exclusions, EU ratification delays (5-6 months). India must leverage for MSME jobs, GIs. Overall, accelerates Atmanirbhar Bharat via diversification.
*Q2 (GS-2, 250 words):* Evaluate how the EU-India FTA aligns with India's Act East Policy and EU's Indo-Pacific strategy. Examine implications for bilateral investment and services trade.
*Model Ans:* The FTA operationalizes India's Act East (extended to EU) and EU's 2021 Indo-Pacific tilt, fostering €30bn export gains, doubling EU-India trade by 2032. Investment: EU tech inflows to India's $4.2tn economy; services: IT/professionals access despite mobility hurdles. Implications: Job creation (millions), GVC integration; risks from CBAM (steel impact), RoO stringency. Success hinges on parallel BIT (Bilateral Investment Treaty), aligning with India's FTAs (19th deal). Strengthens QUAD+ synergies for rules-based order.