India and European Union Conclude Historic Free Trade Agreement Negotiations
In a significant diplomatic and economic development, India and the European Union on Tuesday formally announced the conclusion of negotiations for their long-awaited free trade agreement (FTA). The announcement was made during the India-EU Summit held in New Delhi, which was attended by European Commission President Ursula von der Leyen and European Council President Antonio Costa, who held extensive talks with Prime Minister Narendra Modi.
Procedural Milestone Reached, But Legal Process Ahead
What was signed is a procedural document marking the conclusion of negotiations, not the legal text of the trade pact itself. This means that while the negotiating phase has officially ended, the agreement has not yet been signed and will take several more months to be finalised and implemented.
The final agreement will now undergo a comprehensive process known as "legal scrubbing," which involves a detailed technical and legal review by both sides. According to officials, this process is expected to take at least five to six months. Over the next two weeks, negotiators will prepare a cleaner, consolidated version of the text before it is sent for this legal vetting.
Implementation Timeline and Ratification Requirements
Even after the legal scrubbing is completed and the FTA is formally signed, the agreement will still require ratification before it can come into force. In India, the deal will need approval from the Union Cabinet. On the European side, it must be cleared by the European Parliament, a process that could take additional time.
Officials have indicated that while the agreement could potentially be signed later this year, it is more likely to be implemented in early 2027, depending on how quickly the ratification procedures move on both sides.
Prime Minister Modi Hails "Mother of All Deals"
Prime Minister Narendra Modi, speaking earlier at India Energy Week, hailed the pact as the "mother of all deals" and emphasized that it would open up major opportunities for both India and the European Union. However, trade experts have noted that Tuesday's development represents a milestone in negotiations rather than the legal entry into force of the FTA.
Background and Significance of the Agreement
The India-EU trade negotiations were first launched in 2007, stalled for several years, and were relaunched in 2022 before concluding this week. This FTA is being hailed as one of the most significant economic partnerships for both sides, with expectations that it will sharply expand market access.
Expected Benefits for India and the European Union
For India, the pact promises:
- Duty-free or reduced-tariff access for key labour-intensive exports including textiles, apparel, leather goods, marine products, gems and jewellery, and engineering goods
- Significant boost to job creation and MSME growth
- Better opportunities for Indian services firms in sectors such as IT, consulting, and professional services
For the European Union, the deal will:
- Lower or remove tariffs on a wide range of exports to India including machinery, chemicals, medical equipment, processed foods and beverages
- Potentially include automobiles over time
- Strengthen supply chains between the two economic blocs
Both sides also aim to promote clean technology cooperation and increase investment flows through this comprehensive agreement.
The Road Ahead: EU's Implementation Process
As the document marking conclusion of the pact is signed, the European Commission has outlined the steps the EU still needs to take:
- Publish negotiated draft texts
- Legal revision and translation into all official EU languages
- Propose the agreement to the Council for signature and conclusion
- Adoption by the Council
- Signing of the agreement between the EU and India
- European Parliament's agreement to the deal
- The Council's decision on concluding the deal (essentially allowing it to enter into force)
Once India also ratifies the Agreement through its domestic processes, it can enter into force, according to the European Commission's official documentation.
This landmark agreement represents a major step forward in India-EU economic relations, though the full implementation will require patience as both sides navigate the complex legal and political processes ahead.
