Directorate-General for Trade

India

India is an important trade partner for the EU and a growing global economic power. It combines a sizable and growing market of more than 1 billion people with a growth rate of between 8 and 10 % - one of the fastest growing economies in the world. Although it is far from the closed market that it was twenty years ago, India still also maintains substantial tariff and non-tariff barriers that hinder trade with the EU. The EU and India hope to increase their trade in both goods and services through the Free Trade Agreement (FTA) negotiations that they launched in 2007.

India's integration with the global economy

In particular since the early 1990s, India has embarked on a process of economic reform and progressive integration with the global economy that aims to put it on a path of rapid and sustained growth. Per capita incomes more than doubled during the period 1990-2005. In parallel, EU-India trade has grown impressively and doubled from €28.6billion in 2003 to over €55billion in 2007. EU investment to India has more than tripled since 2003 from €759million to €2.4billion in 2006 and trade in commercial services has more than doubled from €5.2billion in 2002 to €12.2billion in 2006. However, India's trade regime and regulatory environment still remain comparatively restrictive and in 2008 the World Bank ranked India 120 (out of 178 economies) in terms of the 'ease of doing business'. In addition to tariff barriers to imports, India also imposes a number of non-tariff barriers in the form of quantitative restrictions, import licensing, mandatory testing and certification for a large number of products, as well as complicated and lengthy customs procedures.

Overall cooperation framework with India

In 2004 India became one of the EU's "strategic partners". Since 2005, the EU-India Joint Action Plan, revised in 2008, aims at realising the full potential of this partnership in key areas of interest to India and the EU.

The EU and India have in place an institutional framework, cascading down from the annual EU-India Summit, to a senior-official level Joint Committee, to the Sub-Commission on Trade and to working groups on technical issues such as technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS), agricultural policy or industrial policy. These are the fora where a number of day-to-day issues, such as EU market access problems, are discussed

The EU-India FTA

With its combination of rapid growth and relatively high market protection India was an obvious partner for one of the new generation of EU FTAs launched as part of the Global Europe strategy in 2006.

The parameters for an ambitious FTA were set out in the report of the EU-India High Level Trade Group in October 2006, which was tasked with assessing the viability of an FTA between the EU and India. Other studies have reinforced the economic potential of an FTA between the EU and India.

Negotiations for such FTA were launched in June 2007 and, so far, five negotiating rounds have been held. The sixth round is foreseen from 17-19 March in Delhi, before Indian Parliament elections in April.

EU technical and financial trade assistance to India

To assist India in continuing its efforts to better integrate into the world economy with a view to further enhancing bilateral trade and investment ties, the EU is providing trade related technical assistance to India. €13.4million were allocated through the Trade and Investment Development Programme (TIDP) funded from the Country Strategy Paper (CSP) 2002-2006. At present, the follow-up programme to the TIDP is being designed and will be funded by the Country Strategy Paper 2007-2013.

WTO

A successful conclusion of the Doha round would contribute significantly to a more open and stable environment for trade and investment for both the EU and India. India is also a major player in the DDA negotiations and, as a leader of the group of (advanced) developing countries known as the G20, has been one of the "G4", along with the EU, US and Brazil.

Supporting information

Reports

1. Qualitative Analysis of a potential Free Trade Agreement between the EU and India
   • • Executive Summary
     • Main report
     • Annex 1 : Analysis of trade and production structures and implications for non-tariff barriers, services and regulatory parts of an FTA
     • Annex 2 : Projected FDI and economic growth in India
     • Annex 3 : Regulatory Issues
     • Annex 4 : EU-India FTA - Implementation Issues
   • June 2007
   • Format: PDF
2. Economic Impact of a Potential FTA between the EU and India
   • April 2007
   • Format: PDF
3. Report of the High Level Trade Group
   • 13 October 2006
   • Format: PDF