{"id":92087,"date":"2021-03-05T10:47:30","date_gmt":"2021-03-05T05:17:30","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=92087"},"modified":"2021-03-05T10:47:30","modified_gmt":"2021-03-05T05:17:30","slug":"india-eu-trade-relations","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/india-eu-trade-relations\/","title":{"rendered":"India-EU trade relations"},"content":{"rendered":"<p><strong>Synopsis &#8211; <\/strong>After Brexit, India can strengthen bilateral trade and investment relations with the EU by signing a Free Trade Agreement(FTA). This will mutually benefit India and the EU.<\/p>\n<p><strong>Introduction<\/strong><\/p>\n<ul>\n<li>The EU is India&#8217;s largest trading partner. It accounts for 11 per cent of total Indian trade in 2019, making it more important than China.<\/li>\n<li>India has an export potential of $39.9 billion to the EU and Western Europe. \u00a0Apparel, gems and jewellery, chemicals, pharmaceuticals, and plastic have high export potential.<\/li>\n<li>So, making stronger ties with the EU will help India to achieve Atmanirbhar Bharat.<\/li>\n<li>Further, the Generalized Scheme of Preferences in the EU also helps India to improve exports.<\/li>\n<\/ul>\n<p><strong>What is the EU\u2019s Generalized Scheme of Preferences?<\/strong><\/p>\n<p>The EU&#8217;s Generalized Scheme of Preferences (GSP) helps developing countries by reducing the tariffs. This makes it easier for countries to export their products to the region.<\/p>\n<p><strong>Benefits EU\u2019s GSP for India:<\/strong><\/p>\n<ul>\n<li><strong>Reduction in tariffs<\/strong>&#8211; The scheme removes import tariffs from the products coming into the EU market.<\/li>\n<li><strong>Economic growth- <\/strong>The lower tariffs will increase exports. This export revenue encourages growth in income, economic growth, and job creation for India.<\/li>\n<\/ul>\n<p><strong>What is the meaning of graduation under the EU\u2019s GSP?<\/strong><\/p>\n<ul>\n<li>A developing country can export its products and gain an advantage from the GSP. But there is a limit provided for attaining maximum benefits. Once this limit is reached then that particular product will lose the benefits of GSP. That is called <strong>Graduation<\/strong>.<\/li>\n<li><strong>So, Graduation<\/strong> means that imports of certain particular groups of products in a given GSP will lose the preferences of GSP.<\/li>\n<li>Graduation applies when the average imports from a country <strong>exceed 17.5% of GSP imports<\/strong> of the same products from all GSP beneficiary countries during three years (For textiles and clothing this limit is 14.5%).<\/li>\n<\/ul>\n<p><strong>Challenges for India in FTA:<\/strong><\/p>\n<ol>\n<li>Many products of India have already graduated or about to graduate under the EU&#8217;s GSP.<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li><strong>Graduated Indian products- <\/strong>textiles products, inorganic and organic chemicals, gems and jewelry, iron, steel and their articles, base metals, and automotive.<\/li>\n<li><strong>Products that about to graduate &#8211;<\/strong> Apparel, rubber, electronic items, sports goods and toys.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong>Lack of agreeing to the terms <\/strong>in fields such as automotive, dairy, and marine goods by both the EU and India. So, the Broad-based Trade and Investment Agreement [BTIA] commenced in 2007 is yet to take final shape.<\/li>\n<li>After 2013, the Free Trade Agreement(FTA) negotiations were suspended between India and the EU. Both India and the EU were not ready to lose some privileges to gain more.<\/li>\n<li><strong>Agreement on investment: <\/strong>China has negotiated a comprehensive agreement on Investment with the EU. But India didn&#8217;t. So, there is a huge possibility that the EU companies will start investing in China. The delaying of investment provisions will affect India.<\/li>\n<li><strong>Non-tariff measures (NTMs): <\/strong>India faces 414 cases against NTMs in the EU. This is covering a wide spectrum of industries. This will also hamper India and EU FTA.<\/li>\n<\/ol>\n<p><strong>Suggestions to fast pace India-EU FTA:<\/strong><\/p>\n<ul>\n<li>India needs to negotiate with the EU on investment-related issues. Further India also has to negotiate the provisions to improve value chains, especially in technology-intensive sectors.<\/li>\n<li>FTAs often have several institutional arrangements for Non-Tariff Measures(NTMs). India should explore such arrangements to remove the NTMs. This will increase bilateral trade.<\/li>\n<\/ul>\n<p>In the post-Covid recovery, India needs to increase its exports and increase its manufacturing capability. Signing an FTA with the EU will help India to achieve this objective.<\/p>\n<blockquote class=\"wp-embedded-content\" data-secret=\"eW7M17G6V1\"><p><a href=\"https:\/\/forumias.com\/blog\/answeredfree-trade-agreements-with-other-countries-do-not-guarantee-economic-growth-or-boost-exports-to-other-countries-critically-examine\/\">[Answered]\u201cFree Trade Agreements with other countries do not guarantee economic growth or boost exports to other countries.\u201d Critically examine.<\/a><\/p><\/blockquote>\n<p><iframe loading=\"lazy\" class=\"wp-embedded-content\" sandbox=\"allow-scripts\" security=\"restricted\" style=\"position: absolute; clip: rect(1px, 1px, 1px, 1px);\" title=\"&#8220;[Answered]\u201cFree Trade Agreements with other countries do not guarantee economic growth or boost exports to other countries.\u201d Critically examine.&#8221; &#8212; Free UPSC IAS Preparation For Aspirants\" src=\"https:\/\/forumias.com\/blog\/answeredfree-trade-agreements-with-other-countries-do-not-guarantee-economic-growth-or-boost-exports-to-other-countries-critically-examine\/embed\/#?secret=2JznWTzvVp#?secret=eW7M17G6V1\" data-secret=\"eW7M17G6V1\" width=\"600\" height=\"338\" frameborder=\"0\" marginwidth=\"0\" marginheight=\"0\" scrolling=\"no\"><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Synopsis &#8211; After Brexit, India can strengthen bilateral trade and investment relations with the EU by signing a Free Trade Agreement(FTA). This will mutually benefit India and the EU. Introduction The EU is India&#8217;s largest trading partner. It accounts for 11 per cent of total Indian trade in 2019, making it more important than China.&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/india-eu-trade-relations\/\">Continue reading <span class=\"screen-reader-text\">India-EU trade relations<\/span><\/a><\/p>\n","protected":false},"author":10319,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[1333],"class_list":["post-92087","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-ir_0","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700427089},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/92087","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10319"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=92087"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/92087\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=92087"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=92087"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=92087"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}