CARGOCONNECT-MAY23 - Flipbook - Page 13
to 6 million direct and indirect
jobs. One of the key focusses of
European efforts in India is the
planning and implementation of
infrastructural projects. While
these efforts have been so far carried out primarily at the national
level, a bundling of projects at
the European level is planned
for the future. According to the
German Foreign Office: “The EUIndia Connectivity Partnership is
concluded as part of the EU-Asia
Connectivity Strategy, with which
the EU promotes rule-based and
sustainable networking in Europe
and Asia”. The simultaneous
announcement of negotiations
on a separate investment protection agreement, as well as an
agreement on the protection of
geographical indications, is all
the more a reason for hope. The
EU is already one of India’s largest
foreign investors. Ratification
of the envisaged agreements is
therefore likely to further increase
the existing investment volume.
The India-EU FTA is expected to
double bilateral trade between the
two partners from the existing
110 billion dollars. According to a
2020 study by the EU Parliament,
a trade agreement with a reduction
of around 90 per cent of tariffs
could mean added value of 8 billion
to 8.5 billion euros for both sides.
WHY THE SUDDEN
RUSH?
In the past, India was known
for its trade barriers towards
its domestic market, despite
efforts to develop India into a
global manufacturing hub and
to facilitate foreign investment.
The current inclination to conclude a FTA is likely to have been
influenced by three main factors:
The superpower: In particular, China’s increasingly
prominent role in the global
market is likely to be seen as the
driving force behind the recent
efforts. China’s Silk Road Initiative,
The EU and India – the world’s third- and fifthlargest economies – are already important trade
and economic partners. With a foreign trade volume
of 88 billion euros (2021), India is Europe’s tenth
most important trading partner and its fourth most
important one in Asia. Europe’s economic importance
for India is even greater: Europe is the third most
important trading partner and the second most
important sales market, after the United States.
Among the EU member states, Germany leads with a
share of 21.4 per cent (2021), followed by Belgium,
France, Italy, and the Netherlands. The largely
balanced European-Indian trade covers the entire
range of the manufacturing economy.
which finances and supports major
projects worldwide, certainly plays
a decisive role. A comparison of
trade volumes show the economic
impact of the same on the world
market. The current trade volume
of the EU with India amounts to 65
billion euros which is a considerable amount, but it is far less than
the 586 billion euro trade volume
between the EU and China.
The former member: The
UK is also currently negotiating a
free trade agreement with India.
In 2020, the volume of trade
between the UK and India was
23 billion pounds. The goal is to
double this by 2030. However the
UK faces the same hurdles as the
EU on immigration policies and
tariffs rates of India. They seem
willing to take a step towards
India on immigration. At least
that was what point number 24
of the concluding Joint Statement of the EU-India Summit
suggested, i.e. to cooperate in
various migration-related areas.
The increased interest of
India: In the recent past, India
negotiated FTAs not only with
the EU and the UK, but also
with Canada, Israel, the Gulf
Cooperation Council, the United
Arab Emirates and Australia. As
a result of mutual concessions,
India has concluded negotiations
with two partners. The FTAs
were successfully signed with
the United Arab Emirates
(CEPA) in February 2022 and
with Australia (IndAus ECTA)
at the beginning of April 2022.
Lower import duties on Australian wine were also agreed as
part of the IndAus ECTA which
could be an important point for
the EU. The high import duties
on European alcohol had been
one of the points of dispute in
2013. From an optimistic point of
view, it could be seen as a positive
Indian approach when it comes
to Indian trade barriers.
UNCERTAIN OUTCOME
The fact that India and the EU
have once again taken a further
step towards the creation of a
common market is promising and
gives a ray of hope. The European
Commission President Ursula von
der Leyen had previously noted
that India’s existing “untapped
potential” will be explored. The
first projects are to be undertaken
in the field of Artificial Intelligence
(AI) development.
It is yet to be seen whether
the differences of the past will
stand in the way of a renewed
solution such as the regulation
of mutual market access and
its hurdles. For example, how
does the Indian Government’s
“Make in India” programme or
the “Atmanirbhar Bharat” campaign would affect an opening of
Indian markets for non-Indian
products? It remains to be seen
whether the common goals will
be implemented in this second
attempt. The time component
is also likely to be interesting
in this regard. Affirmation of a
goal is one thing and achieving
the same is altogether a different
topic. Therefore the exciting
question is, when and how the
actual implementation will take
place.
PROSPECTS FOR
GERMAN COMPANIES
Germany, being already India’s
most important trading partner
in the EU, could expect a potential
welfare gain of up to 2.2 billion
euros in this regard and hold the
leading position within the EU
when it comes to the expected
increase in exports and imports.
According to a study by the
Bertelsmann Stiftung, a potential
FTA between the EU and India
will not have the same positive
impact on all EU member states
and sectors. According to this
study, however, an increase in
German gross domestic product
of up to 4 billion euros appears
possible. The automotive and
mechanical engineering sectors,
which are already strongly represented, are therefore likely to
retain their leading role in India.
The initiative “MIIM - Make
in India Mittelstand” shows that
India is definitely interested in
attracting German companies,
especially German medium-sized
companies, to India.
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