Indian, German Leaders Renew Push for Deeper EU-India Trade Ties

1 June 2017

Indian Prime Minister Narendra Modi and German Chancellor Angela Merkel met in Berlin this week, calling for renewed efforts towards boosting trade ties between New Delhi and the European Union.

“It’s important for us to proceed with the German-Indian – or rather, the EU-Indian – free trade agreement,” said the German leader on Tuesday 30 May in Berlin, according to comments reported by Reuters. Merkel was referring a decade-old process to establish an accord between the two sides.

“We will do a major push in Brussels to ensure that these negotiations progress again,” she added in a speech to business representatives.

Separately, Merkel told reporters at a joint press conference that the two leaders discussed issues such as how to support the implementation of the UN’s Paris Agreement on climate change.

Following his meeting with Merkel on Monday, Modi flagged on Twitter the discussions he had with his German counterpart on “ways to expand cooperation between our nations in areas such as trade, security, infrastructure, and energy.”

In a post on social media site Facebook prior to the event, Modi said that he hoped India and Germany would “chart out a future roadmap of cooperation with focus on trade and investment, security and counter-terrorism, innovation, and science [and] technology."

Furthermore, Modi added that “Germany is [India’s] leading partner in trade, technology and investment,” and that he is “confident that this visit will open a new chapter in [their] bilateral cooperation.”

The Indian leader has expressed an interest, for example, in greater participation of small and medium-sized companies in his country, including through the “Make in India” initiative launched nearly three years ago to draw greater foreign investment.

The visit to Berlin was one stop in a larger trip by the Indian leader to other EU member states, namely Spain and France.

A decade of talks

A bilateral trade and investment agreement between the EU and India has been in the works since 2007.

However, the process has slowed significantly in recent years, amid disagreements on topics such as intellectual property protections and their implications for pharmaceuticals; visa rules and the freedom of movement for workers; and market access, among other topics.

Other problems that have emerged include the lapse of various bilateral investment treaties between India and some individual EU member states, despite calls for new arrangements in order to provide a more secure environment for greater investment flows.

The EU is India’s largest trading partner, while the Asian nation ranked as the bloc’s ninth largest trading partner last year, according to European Commission data. Major goods traded between them are engineering products, jewellery, industrial products, textiles, and chemicals.

Services trade is also a major component of the bilateral trading relationship, reaching over €28 billion two years ago – a nearly three-fold increase from a decade previously.

The United Kingdom, which is currently preparing to exit the European Union, has expressed its own interest in potentially inking a trading accord with India, with its population of over one billion people.

UK Prime Minister Theresa May met with Modi last November on the subject, highlighting the value of deeper commercial ties while noting that the two sides will need to resolve disagreements on issues such as immigration. (See Bridges Weekly, 17 November 2016)

ICTSD reporting; “Germany pushes for post-Brexit EU trade deal with India,” POLITICO, 30 May 2017; “’Good Interaction’ Says PM Narendra Modi After Meeting with Angela Merkel,” NDTV, 30 May 2017; “Germany’s Merkel calls for faster progress on EU-India trade deal,” REUTERS, 20 May 2017; “A year after Brexit, Narendra Modi is flying in to charm Europe,” QUARTZ, 29 May 2017.

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