India and EU close to sealing trade deal, await nod from top Council in Brussels, Pg1

Key Highlights:

• The European Commission has forwarded its proposal for a Free Trade Agreement (FTA) between the European Union and India to the European Council.
• This potential agreement is poised to be the largest trade deal ever concluded by both the EU and India.
• The FTA aims to eliminate or reduce tariffs on 96% of EU goods exports to India, potentially saving around Euro 4 billion annually in duties.
• For India, the agreement will secure market access for over 99% of its exports to the EU and includes a comprehensive mobility framework for skilled professionals.
• The deal is expected to boost India's labor-intensive sectors like textiles, leather, and automobiles, reducing tariffs on approximately $33 billion of exports to zero.

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Detailed Insights:

• The European Council, comprising heads of state or government of the 27 EU member states, will make the final decision on the FTA.
• The agreement requires consent from the European Parliament after Council approval, while India undergoes its internal ratification procedures.
• Current annual trade in goods and services between the EU and India exceeds Euro 180 billion, supporting nearly 800,000 EU jobs.
• A key driver for restarting negotiations in 2022 was the growing trade surplus of China and the desire for supply chain diversification.
• Both India and the EU seek to reduce reliance on China-centric supply chains, a vulnerability exposed during the COVID-19 pandemic.
• The EU has imposed tariffs on Chinese electric vehicles, and India maintains high duties on imported automobiles from China.
• The United States has also pressured both India and the EU to reduce dependence on Chinese products and avoid becoming transhipment hubs.

Key Concepts Involved:

• Free Trade Agreement (FTA): A pact between two or more countries to reduce barriers to imports and exports among them.
• European Commission: The executive arm of the European Union, responsible for proposing legislation and implementing decisions.
• European Council: The institution of the European Union that defines the general political direction and priorities of the EU.