India-EU still diverge on key issues as EFTA deal goes through

To be sure, the proposed India-EU FTA is among the most comprehensive deals that is being negotiated and could accrue tangible market access gain for India in services and labour intensive sectors such as leather, textiles and engineering among others. However, the deal is also among the most complicated to close with differing positions of the 27 members during a global election year.

“Some progress was made on texts during this round, in particular on Intellectual Property Rights, but both side’s respective positions still diverge on many key outstanding issues.

The 8th round of EU-India FTA negotiations will be held in Brussels after the upcoming Indian elections, with precise dates still to be confirmed,” the EU report said on the negotiations held between 19 and 23 February in New Delhi.

The report indicated that India and EU continue to different on Technical Barriers to Trade (TBT)
which is a major pain point for Indian exporters and has resulted in slow export growth during the last few years. TBT largely results from legal requirements that countries enact to ensure that products are safe, to protect the environment, and to inform consumers, or for reasons of “national security”.

“Negotiators discussed the articles on technical regulations and conformity assessment as well as sectoral annexes (on cars and on pharmaceuticals), but only limited progress was made. Important differences exist between the two sides in their approach to TBTs, in particular in relation to the incorporation of the WTO’s TBT agreement and the application of the FTA’s dispute settlement to this chapter,” the EU reports read.

The Indian Express has earlier reported that several export items to the EU have suffered due to technical barriers. Indian tea exports for instance have suffered from stiff maximum residue level (MRL) requirements in the EU. Tea exports to the EU dipped 6 per cent from $176.47 million in FY18 to $166.08 million in FY23. Moreover, India’s agriculture exports to the EU have also declined in the last five years to $3.12 billion in FY23 from $3.36 billion in FY18.

Tea exporters have also expressed concern over Indian organic tea being put by the EU in the high risk category that triggers increased testing and certification requirements. Indian rice exports to EU have also declined after EU in 2017 reduced the MRL limit for a fungicide used in rice cultivation

In the case of pharma exports, exporters complained that Indian pharmaceutical exports face market access barriers as registration of drugs is taking enormous time in the European Union because of the huge influence the multinational drug companies have. Moreover, in the case of electrical products, the EU imposes standards different from what is globally followed.