India-EU FTA

India and EU have formally re-launched the India-EU Free Trade Agreement negotiations.

This would be one of the most significant FTAs for India as EU is its second largest trading partner after the US.  The India-EU merchandise trade has registered an all-time high value of USD 116.36 Billion in 2021-22 with a year-on growth of 43.5%.  India’s export to the EU jumped 57% in FY 2021-22 to $65 billion. India has a surplus trade with the EU.

India earlier this year has concluded FTAs with Australia and the UAE in a record time.  The FTA talks with Canada and the UK are also underway.

Background

India and the European Union (EU) have been negotiating a free trade agreement (FTA), officially called a Broad-based Trade and Investment Agreement (BTIA) since 2007 but have not been able to conclude it because of differences in some important areas.

Issues with BTIA

The key differences arise over the movement of professionals. India is demanding greater and liberal market access for its service professionals.

India is also seeking data secure nation status by the EU. India is currently not among the nations considered data secure by the EU.

On the other hand, the EU is demanding significant duty cuts in automobiles, wines, spirits and dairy products, and a strong intellectual property regime.

‘Data Secure Nation’ status 

The lack of ‘Data Secure Nation’ status from the EU prevents flow of sensitive data, such as patient information for telemedicine, to India.

The existing data protection laws in the EU (known as General Data Protection Regulation (GDPR)) allow such information to only flow into a country that has been designated as being data secure.

The matter is particularly crucial as it will have a bearing on Indian IT companies wanting market access.