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A very pleasant and historic news is coming out for India from the global economic and diplomatic corridors. The much-awaited Free Trade Agreement (FTA) between the world’s two largest economies and democracies—India and the European Union (EU)—has now reached its final and decisive stage. According to the official press release of the European Commission, an official proposal has now been sent to the Council of the European Union for permission to formally sign and legally finalize this historic agreement. As soon as this proposal gets the green signal from the Council, this agreement will be officially implemented. Experts say that this agreement will prove to be the largest and most comprehensive trade agreement between the two sides so far, which will not only take bilateral trade to new heights but will also add a new golden chapter in the economic relations between India and Europe.
The process of implementing this free trade agreement between India and the European Union is now progressing at full speed. Once formally approved by the Council of the European Union, the agreement will open new avenues of trade between the two continents. The biggest benefit from the implementation of this agreement will be unprecedented expansion of market access between the two regions, significant reduction in import duties, removal of non-tariff barriers to trade and simplification of investment processes. If we look at the current trade statistics, every year a huge trade of more than 180 billion Euro takes place between India and the European Union through goods and services. Thanks to this strong economic partnership, approximately 8 lakh people are directly and indirectly employed within the European Union alone. This agreement is proof that India has today become an essential and most important part of the global supply chain, on which the eyes of the entire world are fixed.
After the full implementation of this Free Trade Agreement, the custom duty imposed on about 96 percent of EU goods exported to India will either be completely abolished or it will be reduced to the lowest level. According to the European Commission’s estimates, the entry into force of this historic agreement is expected to provide huge duty savings to European exporters amounting to approximately 4 billion euros annually. When there is such a huge reduction in import duty, it will directly benefit the common consumers on both sides. The abundance of products in the market will increase, giving customers more options to choose from and the best products available at very competitive and affordable prices. In this era of globalization, this agreement will make the exchange of goods and services between the two economies so easy that there will be a huge reduction in the cost of trade, which will ultimately have a positive impact on the Gross Domestic Product (GDP) of both the countries.
The country’s micro, small and medium industries i.e. MSMEs are expected to get the biggest and far-reaching benefits of this free trade agreement between India and the European Union. The European market will create immense potential and new opportunities for Indian exporters, especially in key sectors like Textiles, Garments, Leather, Footwear, Gems & Jewellery, Pharmaceuticals, Engineering Goods, Auto Components and IT Services. For a long time, Indian products had to face tough competition in the European markets due to high import duties, but after this agreement, when the duty on Indian goods in Europe will be reduced or eliminated, they will become more competitive compared to the products in the local and other global markets. This will strengthen the ‘Make in India’ campaign and will directly and tremendously benefit the manufacturing sector of the country, which will create new employment opportunities.
This free trade agreement is not just an agreement between two trading areas, but it is a symbol of India’s growing diplomatic and economic strength in the changing global economy. Such a deep partnership with the EU positions India as a strong and trusted global partner on the global trading stage. For the last few years, the Indian government has been continuously emphasizing on such international agreements which can promote the country’s exports at the global level. There is every possibility of opening new doors of mutual cooperation through this agreement in emerging areas like technological exchange, digital economy, and green energy. As soon as this proposal receives final approval from the European Union Council, a new era of development will begin for India’s business class and industry, which will prove to be a milestone in taking the country rapidly towards the goal of becoming a five trillion dollar economy.