Recently, government officials have revealed that India and the European Union (EU) are set to resume negotiations for a Bilateral Trade and Investment Agreement (BTIA). The BTIA talks have been suspended since 2013.
Context
Recently, government officials have revealed that India and the European Union (EU) are set to resume negotiations for a Bilateral Trade and Investment Agreement (BTIA). The BTIA talks have been suspended since 2013.
About BTIA
- Background: India and the EU had launched talks for having a wide-ranging Free Trade Agreement (FTA), officially called broad-bases BTIA, long ago in 2007.
- The BTIA was proposed to integrate trade in goods, services and investments.
- However, the talks stalled in 2013 over differences on market access and movement of professionals.
- Scope: The EU was India's largest trading partner in goods 2019-20, ahead of China and the US, with total trade close to USD 90 billion.
- With the signing of the BTIA, India and the EU expect to promote bilateral trade by removing barriers to trade in goods and services and investment across all sectors of the economy.
- Challenges: The pursuit of self-confidence has been accelerated by the Covid-19 crisis under the Atmanirbhar Bharat Mission. This is perceived by the European Union as India's “protectionist stance”.
- India may find it difficult to meet the sustainable standards in labour and environment on which the EU now lays greater emphasis.
- Significance: India seeks to signal that it means business and is not averse to signing trade agreements after it opted out of the Regional Comprehensive Economic Partnership (RCEP) at the last moment.
- The EU, meanwhile, wants to diversify its value chain away from China to India and, hence, there is interest on its part also to have a trade agreement with India.
Connectivity roadmap
- More than Physical connectivity: It is an ambitious and comprehensive connectivity project, focused not only on physical infrastructure but also aims to improve digital, energy, transport and people-to-people connectivity.
- Components: India-EU roadmap covers three main areas - trade and investment, science and technology and the Sustainable Development Goals (SDGs).
- Regional and Multi-Stakeholder Approach: The main focus areas were connectivity within the country, building connectivity with Europe and in that process work with other countries in South Asia and Indo-Pacific.
- It will promote private and public funding for connectivity projects.
- Counterfoil to BRI: A report entitled India-EU Connectivity-Partnership for Development, Demand and Democracy ’emphasizes that the roadmap of communication is indirectly seeking to challenge China’s Belt and Road Initiative (BRI).
- As it emphasizes principles such as democracy, the rule of law, inclusion and transparency and the avoidance of debt.
