All aboard the Delhi express

Pablo Lopez-Alvarez on the prospects for the stalled EU-India trade talks

After six years and 14 rounds of negotiations, discussions between the EU and India on an eventual trade and investment agreement seem to be grinding to a halt, like a train that has run out of steam. Much has been achieved and important concessions made by the two parties, but the 2014 political calendar in Delhi and Brussels poses a real threat to progress.

India holds general elections in the spring, and 2014 is a year of great change in the EU institutions, with a new Commission not in place until November. Against that background, no further progress is likely until well into 2015. Hopefully, the new political leadership that emerges in Brussels and Delhi will come to the negotiations with a fresh perspective that will give the flagging talks some pep so they can conclude sooner rather than later. Both economies and their citizens would benefit enormously from an ambitious and balanced deal.

The upside is that there is already agreement on 95% of tariff lines. But important sticking issues remain which will not be easy resolved. These include India’s request for greater labour mobility across Europe for its nationals and a more radical opening of the EU services market. The EU demands an overhaul of India’s foreign ownership restrictions. Add into the mix that tariffs in certain sensitive sectors – such as automotive, alcoholic beverages, financial services and chemicals – are still to be agreed and it becomes clear that many hurdles remain. Clearing these will not be simple, especially as it won’t be easy for either party to carry public support for some of the very considerable concessions that will have to be made in order to strike a deal. But the first priority once the political dust settles in both India and the EU will be to get the talks train back on the tracks.

Pablo Lopez-Alvarez is Senior Director at FTI Consulting Brussels. For a detailed discussion of the India-EU trade negotiations, see FTI Consulting’s Snapshot EU-India: relations at the crossroads

Pablo.Lopez-Alvarez@fticonsulting.com

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