Free Trade Talks Between India And EU To Curtail China
Containers terminal at the Jawaharlal Nehru Port Trust in Mumbai, India.
India’s Commerce and Industry Minister Piyush Goyal said on Saturday that he has started talks with the EU’s trade commissioner over a free trade agreement (FTA).
The minister’s mention of the FTA negotiations with the EU came days before the 15th India-EU Summit, which is scheduled to be held virtually in the coming week.
This indicates a marked progress in the long ongoing talks between the two economies. The recent restart of trade talks should lead to concrete result as both sides are now ready to reconsider each others perspectives.
After the beating received by the PLA at the hands of the Indian Army at Galwan, EU too wants to strengthen their political and economic cooperation with the India to break the stranglehold of China on World Supply Chain.
Under the current circumstances, apart from the political considerations behind India-EU free trade talks, there are many practical economic implications in the short term. Public confidence in India’s economy is fast growing after the lifting up of the lock down due to spread of the Wuhan Virus pandemic throughout India.
Also India has taken initiative and moved with speed to restrict Chinese technologies and investment. Now other countries are ready to do the same to Chinese goods and investments. This will badly impact the Chinese economy.
A closer economic cooperation with a more advanced trade partner such as the EU would be able to offset the trade curtailment with China. This may explain why the Indian government has taken the initiative.The EU is India’s largest trading partner, accounting for €80 billion ($90 billion) worth of trade in goods in 2019 or 11.1 percent of total Indian trade, on par with the US and ahead of China.
Also India cannot permit China to make it a dumping ground for its cheap and inferior goods. It has to protect its domestic industries from Chinese dumping. From the perspective of the EU, there is demand for its quality goods in India.
The Modi government has attached great importance to its economic diplomacy, which could not only secure more foreign support for its economic growth but could also help it win broader domestic voters’ support.
As an integral part of the global industrial chain, close cooperation between India and EU will be beneficial to both and also help to diversify the global supply chain and not make it dependent on just one country.
