EU, US deals connect India to world's largest markets, open new trade vistas, Pg10

Key Highlights:

• India has secured Free Trade Agreements (FTAs) with the EU and the US, connecting it to the world's largest markets.
• The EU FTA grants India access to over 99% of the EU market for Indian exports by trade value.
• The US interim agreement emerged due to geopolitical factors and complements deals with the EU and the UK.
• India's exports have shown resilience, with goods and services matching a hypothetical no-tariff scenario in the first nine months of FY26, registering 4.3% growth despite an 18% tariff.
• The US trade deal opens a $118 billion global market for textiles and apparels.
• India intends to purchase $500 billion of US energy products, aircraft, technology, and coking coal over the next five years.

Detailed Insights:

• India's approach to FTAs prioritizes protecting vulnerable sectors like agriculture, dairy, and Small and Medium Enterprises (SMEs), ensuring the interests of small farmers.
• The EU FTA includes a comprehensive mobility framework for skilled Indian professionals, while the US deal lacks provisions for labor mobility.
• The US deal involves reducing tariffs on US industrial goods, food, and agricultural products like dried distillers' grains, tree nuts, and soybean oil, while safeguarding the broader domestic market.
• India can potentially increase its share of chemical and pharmaceutical exports to the US, capturing market share from countries like China and Singapore, potentially adding 0.2% to GDP.
• By increasing its share of apparel exports in US imports by 5%, India could add another 0.1% to its GDP, capitalizing on opportunities from Bangladesh, Cambodia, and Indonesia.
• Substituting Russian crude with Venezuelan crude (Merey 16) could save India up to $3 billion on its import bill due to heavy crude discounts.
• Both the US and the EU have shown flexibility regarding non-tariff barriers and digital trade, indicating a willingness for dialogue.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers.
• Carbon Border Adjustment Mechanism (CBAM): A tariff on imports based on the amount of carbon emissions associated with their production.
• Revealed Comparative Advantage: A measure of a country's relative advantage in a particular industry or product category.