India and the European Union appear to be close to finalising a trade deal that is expected to be signed during the visit of two of the EU’s senior-most officials, European Commission President Ursula von der Leyen and Antonio Costa, the president of the European Council. The trade agreement, discussions for which are said to have begun more than two decades ago, accelerated in the wake of Donald Trump’s global assault on tariffs on countries across the world sparing no one, not even Western European allies. And yet, the deal is still being ironed out with reports indicating that the two sides still have some work to do before it is finally signed.
While the final details of the deal will be made known only once it is officially released, initial reports have suggested that India will be making compromises similar to the ones that they offered the UK -- reducing import duties on passenger vehicles, up to a certain number of vehicles. One report suggested that India will be reducing import duties on European-made cars from the current 110 per cent to around 40% before ultimately reducing it to 10%. Tariffs have also been done away with for other sectors like alcohol and high-end machinery, but have been retained in dairy and agricultural products in order to protect domestic producers.
Now, while this might lead to disgruntlement among domestic manufacturers, especially in the automobile sector, such a trade deal, with a like-minded trading partner, will have huge benefits on both sides of the border. India’s automobile manufacturers are today global players capable of holding their own in a competitive global marketplace. And if they aren’t, they have no excuse for not being competitive despite years and years of protection that was only done away with during the liberalisation of the 90s.
India and Indian companies stand to benefit, thanks to being able to find new markets to export Indian goods -- mainly textiles, apparel, automobile parts, pharmaceuticals and the like, while also being able to access European technology, high-end components, spirits, and the like. More than that, both sides are eager to complete this deal in an effort to bring a modicum of stability to international trade that has been upturned by the Trump administration and by the utterances of Trump himself.
A trade deal like this, despite there being detractors on both sides, must be pushed through, simply because it will force Indian manufacturers, who for too long have been living within their own comfort zone, to be shaken up. Sure, there will be winners and losers who emerge from this, but today India is in a position where it can negotiate with the EU on an equal footing, not as a junior partner, but one who has something more to offer the world than just a large marketplace.
But for that, India also needs to demonstrate that its negotiations are not being influenced by the private interests of individual businessmen and their conglomerates, but rather with the people of the country in mind.
