Just a month after concluding negotiations, India and the European Union on Friday released the provisional text of the free trade agreement. “It provides a first comprehensive look at the scope and ambition of the agreement. Tariff schedules will follow at a later stage,” said the Department of Commerce in a post on X.
With a total of 20 Chapters, the FTA is poised to look beyond just goods trade at a whole host of issues, including digital trade, intellectual property, as well as trade in services in sectors including financial and telecommunications services, as well as professional services and mobility.
Significantly, the draft text also makes it clear that India will not get any special exemption from the provisions of the Carbon Border Adjustment Measures (CBAM), but a concession could be given in case a similar provision is given to another country.
“For carbon border adjustment measures, the Parties shall apply no less favourable conditions to the other Party’s goods than those applied to like goods from other third countries as regards any flexibilities granted in the implementation of their carbon border adjustment measures,” said the provisional text.
The text also provides for model mediation procedures “to facilitate the finding of a mutually agreed solution to a dispute through a comprehensive and expeditious procedure with the assistance of a mediator”.
The text also provides for a separate chapter on dispute settlement. “The objective of this Chapter is to provide an effective and efficient mechanism for the avoidance or prompt settlement of any dispute arising between the Parties concerning the interpretation and application of this Agreement, with a view to reaching, where possible, a mutually agreed solution,” it said.
Another significant provision is a review to be undertaken within five years of the FTA coming into effect in order to assess its utilisation and further its objectives.
The text also calls for exceptions and says each party shall freely allow in freely convertible currency any payments and transfers with respect to transactions on the current account of the balance of payments that fall within the scope of this Agreement. They will also permit any payments and transfers with respect to transactions on the current account of the balance of payments that fall within the scope of this Agreement.
“In exceptional circumstances of serious difficulties for the operation of the Union’s economic and monetary union or, in the case of India, for the operation of the monetary and exchange rate policy, or threat thereof, the Party concerned may adopt or maintain safeguard measures with regard to capital movements, payments or transfers until a period of normalcy is restored,” it further noted.
India and the EU, on January 27, announced the conclusion of negotiations for the free trade agreement, which was termed as the mother of all deals, coming amidst the reciprocal tariffs levied by the US at that time. Negotiations for the deal continued for nearly two decades, and it is likely to be signed early next year.
Bilateral merchandise trade between India and the EU amounted to $136.54 billion in 2024-25, with India exporting roughly $ 75.85 billion to the EU. India-EU trade in services reached $83.10 billion in 2024. The two hope to double bilateral trade by 2032.
