Within one week, India has agreed a landmark trade deal with the EU and laid the way for a second with the US.
In reply to US president Donald Trump’s constant disruption of global trade arrangements, along with China’s increasing impact , the India–European Union Free Trade Agreement indicates a strategic realignment to target alternative markets and diversification to cushion economies towards the effect of surprising policy swings. In the making for almost 2-decades, the agreement brings the 27-european states and the Indian markets – marking 2-billion people and 25% of global GDP – clloser. Signed on 27 January, the agreement is the largest ever concluded by either the EU or India.
‘We delivered the mom of all deals’, stated European Commission president, Ursula von der Leyen, in a press statement in New Delhi. ‘It will cut up to €4-billion [£3.5 billion] in annual tariffs for exporters of all sizes and it will generate excellent jobs for millions of employees in India as well as in Europe,’ she stated. From a European approach, the agreement permits diversification faraway from China and the USA. For India, it permits steady access to the world’s largest single market. ‘We have sent a signal to the world that rules-based totally cooperation nonetheless delivers great results,’ stated von der Leyen.
The EU and India already trade over €180 billion worth of goods and services yearly, impacting around 800,000 EU jobs. The agreement is ventured to double EU goods exports to India by 2032.
Lowering barriers
The target is on cutting tariffs and trade barriers. For example, India will remove tariffs ranging as much as 44% on machinery, 22% on chemicals and 11% on pharmaceuticals. As the settlement comes into force after ratification in Europe, the EU will cut tariffs on over 90% of imported products, or 91% in terms of value; whereas India will cut tariffs by 86% of products, and 93% in terms of value.
At a time while the USA persists to tighten visa regulations for Indians, the EU and India have also signed a Comprehensive Framework on Cooperation on Mobility – a pack targeted toward easing the movement of Indian students, researchers and professionals across 27-European states. ‘The pact will lowers it strategic reliances, aligning together Indian skills, service and scale with European technology, capital and innovation,’ stated von der Leyen.
EU is likewise investigating Indian participation in Horizon Europe, the world’s largest public research programme. ‘I can’t look ahead to the best talents to work to boost health, clean energy, frontier technologies and we are able to establish India–EU innovation hubs. This will support researchers and startups to collaborate on next generation technology’, stated von der Leyen. Both India and the EU have acclaimed the agreements as beneficial for both aspects.
Steps towards a US deal
In parallel, on 2 February, President Trump posted on his Truth Social platform that the US and India had also ‘agreed a trade deal’. Official details appeared on 7 February when the 2 governments together declared that they had ‘reached a framework for an Interim Agreement’ on trade.
Last year, Trump had imposed high and extensive tariffs on India – a 25% ‘‘reciprocal’ tariff, reportedly in response to Indian tariffs and non-tariff trade barriers on US goods, in addition to a 25% penalty for getting Russian oil – sending Indo–US trade right into a steep nosedive.
Under the proposed framework, the US would decrease the reciprocal tariff from 25% to 18%. In return, India could work towards reducing tariffs and non-tariff barriers in opposition to US to zero. India also agreed to purchase for $500 billion of US energy products, aircraft and aircraft parts, precious metals, technology products, and coking coal over the next 5 years, as well as increasing trade in other sectors.
While Trump’s Truth Social post included a Indian pledge to stop purchasing for Russian oil and purchase more from US and Venezuela, no such commitment shown in the legitimate announcement.
Unlike the enthusiastic positive reception for EU agreement, the US deal has been closely criticized by India’s opposition parties, that have dubbed it a capitulation by Prime Minister Narendra Modi and a sell-out of legitimate Indian interests.
