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EU and India resume negotiations on trade agreement

After a hiatus of more than eight years, India and the EU resume their FTA negotiations with the potential to strengthen the automotive industry.

The trade negotiations aim to boost trade and investment flows between the two regions by reducing tariffs and non-tariff barriers, include investment protection clauses and open markets for services and public procurement.

The automotive industry for both parties is one of the key sectors to benefit from the free trade agreement (FTA). The EU is India’s third-largest trading partner while India has overtaken Japan as the third largest light vehicle market in the world in 2022. The European Automobile Manufacturers Association (ACEA) believes the agreement has the potential to increase exports of European cars to India enormously, which could lead to the creation of thousands of jobs in the EU. However, the association is also concerned about the potential impact of low-cost vehicles from India on the European market. These could put pressure on European automakers to lower their prices to remain competitive. ACEA therefore calls for the FTA negotiations to address this issue and ensure a level playing field for all parties involved.

ACEA also points out that India has introduced non-tariff barriers in the past, such as technical regulations and testing requirements, which could limit market access for European automakers. The association is calling for these barriers to be removed in the FTA negotiations and for a working group for the automotive industry to be established under the agreement, as currently exists for the FTAs with Japan and Korea.

Lastly, the investment protection negotiations are intended to create a predictable and secure investment environment for investors on both sides. This is to be achieved through commitments on non-discrimination, protection against expropriation without compensation, and unfair treatment of investors and their investments, while establishing an effective and modern dispute settlement mechanism to enforce these rules. For the automotive industry this is a welcome turn since long-standing investments and operations in India would finally fall under a regulated umbrella.

See ACEA´s Position Paper HERE.

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