India moves ahead on EU deal as US pact hangs fire, Pg5

Key Highlights:

• India and the European Union (EU) have made significant progress in trade deal negotiations, with 20 out of 24 chapters signed.
• The aim is to finalize the deal before EU leaders visit India later in January.
• European Council President Antonio Luis Santos da Costa and European Commission President Ursula von der Leyen will be chief guests at India's Republic Day celebrations and co-chair the 16th India-EU Summit on January 27.
• The US economy ended 2025 with 4.3% growth in the third quarter, but faces imbalances.
• Cumulative FDI from the EU to India reached around $120 billion by 2024.

Detailed Insights:

• India is focusing on regional trade agreements like the India-EU pact due to uncertainty surrounding a trade deal with the US and concerns about the Chinese economy.
• The EU-India Free Trade Agreement (FTA) has been stalled for a decade due to disagreements on environment and labor rights.
• The US economy's growth is concentrated in AI capacity expansion, which is energy-intensive and may not be sustainable.
• China's long-term growth is declining due to a real estate crisis and ageing demographics, limiting global demand.
• Germany's Skilled Immigration Act provides quotas for Indian professionals, potentially making the movement of skilled persons a negotiable instrument in the India-EU trade agreement.
• An India-EU trade deal could incorporate new elements of service trade and an investment agreement to bring in technology, with Germany playing a leading role.
• Foreign Direct Investment (FDI) is considered the best long-term source of technology and is complementary to trade.

Key Concepts Involved:

• Free Trade Agreement (FTA): An agreement between two or more countries to reduce or eliminate trade barriers.
• Foreign Direct Investment (FDI): An investment made by a firm or individual in one country into business interests located in another country.
• Mode 4: Refers to the supply of services by a service supplier of one country, through the presence of natural persons of that country in the territory of any other country.