India-EU race to finalize trade deal as US pact stalls
What's the story
India is making headway in its trade deal negotiations with the European Union (EU), with officials announcing that negotiations have reached what they call a "historic juncture." Commerce Secretary Rajesh Agarwal announced that 20 out of 24 chapters of the proposed agreement have been finalized. The goal is to finalize the deal before EU leaders visit India later this month for Republic Day celebrations and the 16th India-EU Summit on January 27.
India
'We are already in the last and most arduous leg'
Commerce Secretary Agarwal told reporters, "We were already in the last and most arduous leg of the negotiations with the EU for three months. We are very close now. We have closed 20 out of 24 chapters. There are a few issues on which the negotiations are ongoing." "We are virtually engaged on a day-to-day basis. We are trying to see if we can meet the timeline before our leaders meet."
Deal significance
India-EU trade deal could be 1 of the largest
The India-EU trade deal, once signed and implemented, will be one of New Delhi's biggest trade agreements. It is expected to offset the impact of high US tariffs and boost Indian labor-intensive exports to the EU. Sensitive agricultural issues from both sides have been excluded from this agreement, a government official said. The official was replying to a query based on reports that agriculture was left out of the trade agreement.
Trade hurdles
Carbon tax poses challenge in India-EU negotiations
The EU's carbon tax has emerged as a major hurdle in India-EU trade talks. Starting January 1, the EU implemented its first carbon tax, impacting imports from countries with lower environmental standards. India primarily exports aluminum, iron, and steel to the EU, which are projected to be impacted due to the regulation.
Market diversification
US trade deal uncertainty pushes India to explore new markets
The uncertainty over the US trade deal has prompted India to look for new markets. In November, the Commerce Ministry asked trade lawyers working on these deals not to take leave amid fears of lost orders due to high tariffs. Reports suggest Indian apparel manufacturers are facing stalled negotiations with US importers over summer orders worth $2 billion. Exporters stated the lack of a deal would push the majority of summer orders to competitors like Bangladesh, Vietnam, and even China.