Ninety-nine per cent of the Indian exports will be tariff free and most of the sectors can directly compete with their global peers in the European market with confidence.
And India is perhaps the only country that has sealed as many as 13 FTAs and 6 preferential trade agreements (PTAs) with countries and association of countries including the EU, Britain, Japan, Australia, Korea, the ASEAN, Sri Lanka, Asia Pacific, Sri Lanka and Thailand.
This is a scintillating example of how India’s current path-breaking foreign policies and tactical planning has worked wonders in a vicious environment where India’s overseas trade almost has been pushed to a cliff’s edge by the draconian tariffs imposed by the US.
India has moved deftly and assuredly to take a tangential route diplomatically to work out deals with nations apart from Uncle Sam.
It does not mean that this is a move just to tackle the US high import taxes, but the EU deal has been in the making for almost two decades now, on and off. But the talks were accelerated in the last few months and were finally resolved Monday late night. This comes at a time the EU, Britain and other countries taken a studious stand against Trump going overboard and even threatening the US’ committed allies in Europe.
It is expected the wrapped-up EU deal would generate a quarter of the global trade and Indian exporters are buoyant by the announcement.
Both sides benefit
By the deal, the EU is benefitted as much as India and would access the tightly guarded Indian market. The EU would double its exports to India by 2032 by the eased-out market for its key products such as cars, alcohol and machineries.
Meanwhile India has tariff free access into the EU bloc to its textiles and pharmaceuticals that are seeing extreme pressures on Trump taxes, as well as gems and agricultural produce. Indian farmers never had a chance to export their produce to the European market and they can do so now and compete with other African and European and Asian peers.
But, it remains to be seen how the exporters are given incentives by the Indian government to facilitate a seamless trade.
We also need to see the EU conditions regarding its access to the Indian market after the final drafting of the deal is over and the draft gets out for public scrutiny.
Indian manufacturers have to watch out how the free access to the Indian market would dent their prospects. And how the Indian government would protect their interests.
The EU like Britain, has asked for the participation in the lucrative Indian public sector biddings, which is a critical element of risk and loss of business for local players, competing with stronger and advanced adversaries.
And there would be no barriers for the EU companies to set up base here and compete with local industries to produce and market cheaper goods.
Whether such a move would drastically affect the vast Indian MSME sector, which is undergoing tremendous stress due to want of support and higher taxes and costs like electricity.
Everything needs to be carefully seen when the legal draft of the deal finally gets out. The finalising and signing the legal document would take at least a year as the agreement inputs are humongous. So, India’s exporters have to wait until that time to start sending their goods to the EU tariff free.