Brussels bats for India-EU FTA, but highlights New Delhi's protectionist policies

WION New Delhi Jul 14, 2020, 09.26 PM(IST) Written By: Sidhant Sibal

Goods at Indian ports Photograph:( Reuters )

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European Union is India's trading partner and it is also the largest investor, this despite the Brexit.

Ahead of the 15th India European Union summit on Wednesday, EU has pointed out at New Delhi's protectionist policies on trade while calling for Free trade agreement to be a far-reaching one.

An EU official said, "We have great potential to develop further and leaders will express to move towards balanced and comprehensive FTA".

European Union is India's trading partner and it is also the largest investor, this despite the Brexit. Highlighting "a lot of untapped trade potential", EU official pointed out to the less than 3% of EU's external trade being with India which is "far below what we expect in such a relationship."

On the question of "early harvest" on the trade front, EU officials said, "it is not something EU wants to see with its engagement with India..we want to have a far-reaching FTA that benefits not only India, EU but it should be win-win, that means we should focus not only on low hanging fruits but bring our relationship overall to a new level".

EU has proposed one "low hanging fruit" in the form of standalone investment protection agreement but says hasn't received a positive reaction from the Indian govt. Both sides working on high-level trade dialogue which will the first institutional mechanism to allow EU trade commissioner and Trade minister Piyush Goyal to engage in talks.

Brussels drawing attention to the increased protectionist policies by New Delhi said, "We have witnessed a trend in India which goes more towards protectionism" and recent announcements that "India wants to pursue a self-reliant economy didn't help". Amidst the COVID crisis, Indian PM has called for Atmanirbhar Bharat or a self-reliant India. 

India EU FTA talks failed in 2013 though Technical talks have been going to bridge the gaps. Key issues why talks failed were on customs duty on wine, auto manufacturing and labour issues. While India did not want an FTA without investments being part of it, EU wanted FTA on goods. On European cars, Brussels said it wants to sell full manufactured cars to be sold in India to which New Delhi pointed out to its policy of local manufacturing.

High customs on wine in India was another thorny issue as well as EU raising the issue of labour and human rights issues. EU also wanted to be part of the government procurement, which India is not keen on.