The proposed free trade agreement (FTA) negotiations between India and the European Union (EU) require political guidance to reach a commercially meaningful deal while acknowledging each other's sensitivities, an official statement stated on Thursday.

The discussion on the pact took place during a meeting between Commerce and Industry Minister Piyush Goyal and the Ambassadors of the European Commission delegation.

Goyal emphasized that both parties are working towards a balanced, ambitious, comprehensive, and mutually beneficial FTA.

"The FTA negotiations, after 9 rounds of intense engagement, need political directions to arrive at a commercially meaningful deal while understanding the sensitivities of each other," the commerce and industry ministry stated.

Sustainability and Development Considerations

The minister also emphasized that any discussions on sustainability must respect the principle of 'Common But Differentiated Responsibility (CBDR)' and that the implementation of such measures should consider the varying development paths of countries.

These comments are particularly relevant as India has expressed concerns about the EU's carbon tax on certain sectors and its deforestation regulation.

Bilateral Trade and Economic Growth

He further mentioned that India's economy is projected to grow at an annual rate of 7-8 percent, making it the third-largest economy globally in the coming years. This rapid growth is expected to drive India's GDP to $35 trillion by 2047.

The two sides also engaged in discussions under the India-EU Trade and Technology Council, a mechanism that the EU has only with India and the United States.

India's bilateral trade in goods with the EU reached $137.41 billion in 2023-24, making the EU India's largest trading partner in goods. Additionally, bilateral trade in services between India and the EU was estimated at $51.45 billion in 2023.

The trade agreement with the EU would enable India to broaden and diversify its exports of goods and services while strengthening value chains.

"India aims to establish balanced agreements with major global economies to enhance its market share in international trade," the statement noted.

Strategic Geopolitical Implications

The trade agreement between India and the EU could enhance India's geopolitical position by reinforcing its role as a key player in global trade. Strengthening ties with the EU would allow India to diversify its trade partnerships and counterbalance the influence of other regional powers, such as China, improving India's strategic significance in both regional and global contexts.

Economic Benefits

The India-EU FTA could bring significant long-term economic benefits, including job creation across various sectors due to increased trade and investment flows. It could also facilitate technology transfer, enhancing India's industrial capabilities and innovation. Additionally, the agreement may attract greater foreign direct investment (FDI) by providing a stable and predictable environment for investors, thus strengthening economic cooperation and fostering deeper bilateral ties between India and the EU.