The India-European Union (EU) free trade agreement could get a fresh lease of life after the India-EU summit this week, a person familiar with the development said on Monday, given that New Delhi is looking to attract foreign investments and European nations seeking to cut their economic overdependence on some countries.
Trade and investment will be an issue on the table for talks when Prime Minister Narendra Modi sits down for the virtual summit with leaders of the EU – Charles Michel, President of the European Council and Ursula von der Leyen, President of the European Commission. This is the first meeting between the two sides since von der Leyen was elected head of the European Commission last year. The summit itself is the 15th between the two sides though the first India-EU summit took place in 2000 in Lisbon.
According to the person cited above, though discussions for a bilateral trade and investment treaty started in 2007, “at some stage there was a feeling that we should give a pause to those negotiations.” The past few years have not seen “very substantive” engagement on free trade arrangements or investment arrangements, the person said. With the von der Leyen Commission coming into office in December, “there have been initial exchanges at various levels – at the level of the prime minister, the commerce minister and the external affairs minister,” the person cited above said adding that the exchanges resulted in the thinking that “maybe its time for us to look at these issues afresh and try to see if there is a meeting ground.”
“Therefore I think the summit will be critical in terms of trying to probe a meeting ground between the two sides to find a way forward,” the person said.
The fresh thinking comes in the midst of debate in Europe over the “overdependence of EU on maybe on some suppliers,” the person said pointing out that many leaders had “publically (spoken) about economic sovereignty which was not something used very often in the lexicon of the European Union earlier.” The oblique reference was to countries looking to cut economic dependence on China in the wake of the covid-19 pandemic. “There is talk also of strategic autonomy which requires not being dependent for critical supplies on the outside world,” the person said – in what is seen as the need among European countries to move supply chains out of China or diversify production in other countries in a bid to lessen their dependence on China.
Against this backdrop and the fact that India was looking to attract investments and companies looking for other markets, “it’s a great time to look at and develop may be a new (economic) paradigm” between India and the EU, the person cited above said.