Decoding EU-India FTA | Address by H.E. Hervé Delphin, Ambassador of the European Union

Dear Additional Secretary Darpan Jain,

Excellencies, distinguished Ambassadors,

President, Members of Board, Secretary General and Members of FEBI,

Dear Guests,

On 27 January, exactly 100 days ago, the EU and India concluded the FTA negotiations. I congratulate FEBI on hosting today’s event at this very symbolic juncture. 

I am happy to be here with representatives of EU Member States and EU businesses. I would like to give a special welcome to our Chief Guest, Additional Secretary Darpan Jain, who is the right man in the right place today as he was Chief Negotiator of the EU-India FTA.

100 days on, it is a good moment to meet. It is still early enough to celebrate what we have achieved. But it is also time to look ahead and reflect on what needs to be done to capitalise on this achievement. 

The FTA was long in the making, with ups and downs on the way. There was an FTA.01 negotiation. And since 2022, an FTA.02 new negotiations.  Two decades of negotiations, pause and reconsiderations.

But we ended up with a good deal that will hopefully stay with us for many more decades.

It will create a free trade zone covering nearly 2 billion people and a quarter of global GDP. 

It will connect the world’s largest single market with its fastest-growing economy.

 It will be the largest FTA ever signed by either side. For all these reasons it has been rightly billed the ‘mother of all deals.

This agreement is comprehensive, balanced and commercially meaningful.

It is comprehensive as it covers a wide range of trade disciplines, from core market access areas, such as trade in goods and services, to intellectual property, digital trade or dispute settlement, among others.

It is balanced as it provides for similar level of concessions and respects both sides’ sensitivities. In some areas, where gaps could not be bridged, we settled for a less ambitious outcome or even set aside certain topics with a possibility to revisit them when time is ripe.

Most importantly, the FTA is commercially meaningful as it provides for a significant market opening. 

The EU will eliminate or reduce duties on more than 99% of Indian goods exports, while India will grant better access for almost 97% of EU exports. EU customers will benefit from cheaper Indian textiles, leather, footwear, gems and jewellery, tea, coffee, spices and marine products, to name a few. Indian businesses will see lower prices on EU industrial goods, like machines, aircraft or medical equipment, while customers will find it easier to purchase European cars, pharmaceuticals or wines. 

The FTA will also liberalise trade in services. Indian firms will have more opportunities to provide services on the EU market, on a temporary basis, by highly skilled operators, such as IT specialists or professional services providers. EU firms will gain better access to Indian market, for example in financial or maritime transport services sectors.

Customers will enjoy wider choice and lower prices. Businesses will save on lower tariffs and cheaper production inputs. Economies will benefit from trade diversification as well as from better integrated and more resilient supply chains. 

Our bilateral trade in goods and services, which currently stands at over EUR 190 billion, is poised to get additional boost from the FTA. 

Consolidated data shows that EU trade with FTA partners grows twice faster than with non-FTA partners. 

Think of it. It is estimated that EU’s goods exports to India will double by 2032. With preferential access to the EU market Indian companies will be well-positioned to significantly increase their sales to the EU. This should take our trade exchange to an entirely new level.

The FTA is not only about the numbers. It is about tangible benefits for businesses and people. More trade means more jobs and more investments. 

The EU Economic Footprint study, which we launch today, found that 6,000 EU firms have created more than 3 million direct jobs in India. We will present more detailed findings later today. On the other side, 1,500 Indian companies create jobs in the EU. It is estimated that EU-India trade supports close to 800,000 EU jobs. A recent survey by FEBI revealed that 78% of EU business expect to increase employment in India once the FTA is in place.

Trade stimulates investments. EU is a leading investor in India, with an FDI stock worth EUR 140 billion. Indian investment in the EU has reached nearly EUR 40 billion. 75% of EU businesses surveyed by FEBI expect to increase investment in India once the FTA is in force. 

The opportunities arising from the FTA are clear. The challenge is to turn the opportunities into achievements. Legal provisions of the FTA must be translated into business deals. 

For that to happen several things are necessary.

First, the FTA should enter into force as early as possible. Both, EU and India, agree on that. Currently, the legal teams are going through the negotiated text to give it a proper legal form. We aim to conclude the legal scrubbing by the summer with a view to sign the agreement by the end of the year. If the ratification process goes smoothly, and there seems to be a broad-based political support for the FTA in Brussels, the agreement could hopefully enter into force in the first half of 2027.

Second, both sides must ensure that the agreement is implemented smoothly and in good faith. For this to materialise, we need to align on a pro-FTA mindset and approach across our systems: Customs procedures or conformity requirements should serve their purpose and not be used as trade barriers. If administrative procedures are too burdensome businesses may consider that cost of compliance outweighs the benefits of preferential tariffs, in which case the FTA potential would be lost. That would be a missed opportunity.

In this respect, both sides must continue efforts to improve ease of doing business. I welcome the ongoing reform of the QCO system in India and look forward to further action in this area in line with the recommendations made by the High-Level Committee on Non-Financial Regulatory Reform.

Third, the FTA does not cover all relevant areas. We need to look at ‘unfinished business’ and ‘beyond FTA’. Investment is the main case in point. 

Like the EU seeks to attract investments, India also needs investment to sustain growth. EU companies are ready to invest more in India if proper conditions are created. 

There is regrettably no FTA chapter on investment liberalisation in non-services sectors, which would have given investors more assurance and predictability. The EU and India should revisit this area two years from the entry into force of the FTA, as envisaged in the review clause, to see whether they can find a common ground. 

Both sides should also conclude promptly the ongoing negotiations on the Investment Protection Agreement (IPA), which would give investors a solid legal framework and additional incentive to expand their economic footprint. The business and political constituencies in Europe are expecting it.

To complete the picture, we should also swiftly conclude negotiations on the third agreement launched in parallel to the FTA and IPA, namely the Agreement on Geographical Indications (GIs). It would give further boost to trade by ensuring proper protection of Indian and EU’s iconic products, such as e.g. Darjeeling tea or Roquefort cheese.

Finally, the FTA is not just a game-changer for boosting trade. It is a catalyst for the closer integration of our economies and our ecosystems. The joint EU-India Comprehensive Strategic Agenda has paved the way for greater cooperation at all levels: from research and innovation (with the Innovation partnership and the Horizon Europe Association Agreement under negotiation) to scaling-up with the startups hubs to cooperation in strategic sectors and value chains under the Trade and Technology Council and joint investment and production with the Blue Valley initiative. In parallel, we are advancing on Talents and skills’ mobility.

We are committed to have European companies to be more closely associated to our pro-business and pro-growth agenda. Our close work with FEBI is a tangible proof of that. And so is the first ever EU-India Business Forum organised in the margins of the EU-India Summit last January. This Forum should become a standard feature of EU-India relations. And all the initiatives I just mentioned will be done with the involvement of the private sector.

Dear guest, dear Excellencies, ladies and gentlemen,

We have laid the foundations of the EU-India Economic express. All key stakeholders are on board.

We are on the right tracks. We should move full steam ahead and remove all possible remaining roadblocks. 

• For the benefits of our respective economies and shared prosperity. 

• But also, for the global significance this FTA has. It will become  a cornerstone of global economic stability, predictability and de-risking. The EU and India have made a similar strategic move of building a dense network of FTAs, a lace of prosperity and economic stability. This is in itself a major common good. 

For now, let’s celebrate the conclusion of the negotiations of the EU-India FTA. And let’s get back to the works so it becomes the agent of change it is designed to be.

Thank you for your attention. 

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