EU and India Push for Free Trade Agreement Amidst Global Economic Shifts

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The European Union and India are making significant efforts to establish a free trade agreement, with the EU Commission chief, Ursula von der Leyen, recently meeting Prime Minister Narendra Modi in Delhi to discuss the potential deal. The agreement, which would be the largest of its kind globally, aims to deepen trade and investment collaboration in various areas, including semiconductors, AI, and cleantech. The two sides have been engaged in talks since 2021 and are set to hold another round in March, with an India-EU summit also scheduled for later in the year.

The EU's push for a free trade agreement with India comes amidst growing tensions with the US, particularly with regards to trade tariffs. The EU has expressed its intention to react "firmly and immediately" against any unjustified tariffs, highlighting the importance of strengthening trade relationships with other countries, including India. The EU is India's largest trading partner in goods, with bilateral trade reaching $135bn in 2022-23, nearly doubling in the last decade. Some 6,000 EU companies operate in India, demonstrating the significant economic ties between the two entities.

Despite the challenges posed by differences in areas like agriculture and manufacturing, India has become more open to signing free trade agreements in recent years. The country has signed a $100bn free trade agreement with the European Free Trade Association (EFTA) and has restarted free trade talks with the UK. The EU is also exploring a future 'Security and Defence Partnership' with India, similar to its partnerships with Japan and South Korea, as part of its efforts to expand relationships in the Indo-Pacific region. This partnership would facilitate cooperation in security and stability, further strengthening the ties between the EU and India.

The timeline of events leading up to the current negotiations is as follows: * 2021: India and EU relaunch talks on a long-pending free trade agreement * 2022-23: Bilateral trade between India and EU reaches $135bn * 2024: EU Commission chief Ursula von der Leyen meets Prime Minister Narendra Modi in Delhi to discuss free trade agreement * March 2024: Next round of free trade talks scheduled * Later in 2024: India-EU summit to be held The stakeholders involved in the negotiations have expressed their views on the potential agreement, including: * Ursula von der Leyen: Emphasized the importance of timing and determination in reaching a free trade agreement * Narendra Modi: Met with Ursula von der Leyen to discuss the potential deal * EU companies: Over 6,000 operate in India, demonstrating the significant economic ties between the two entities

The policy points to be considered in the free trade agreement include: * Tariffs and trade barriers * Agriculture and manufacturing * Investment collaboration in areas like semiconductors, AI, and cleantech * Security and stability cooperation * The potential agreement would have significant implications for the global economy, particularly in the context of growing trade tensions between the EU and US. As the EU and India continue to negotiate, it remains to be seen whether they can overcome their differences and establish a comprehensive free trade agreement, which would be a significant milestone in their economic relationship.