Milan: India accords a high priority to the free trade agreement (FTA) with the European Union (EU), and a deal is achievable by the year-end given the shared urgency, finance minister Nirmala Sitharaman said on Tuesday.
Speaking at a conference on ‘cross border collaboration for future resilience’ on the sidelines of the Asian Development Bank’s (ADB) 58th annual meeting in Milan, Sitharaman said bilateral deals are now necessitated by rising geopolitical uncertainties, supply-chain fragmentation and the way US reciprocal tariffs have panned out.
“Countries are today very clearly looking at bilateral arrangements. India has been negotiating with the UK and EU for some time. But today, the sense of urgency is felt by both the sides,” Sitharaman said.
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Prime Minister Narendra Modi and British Prime Minister Keir Starmer on Tuesday announced the long-pending India-UK bilateral trade deal. The India-UK FTA, a milestone in bilateral relations, aims to attract investment, create jobs and open new avenues for economic cooperation, strengthening strategic partnership between the two nations.
Supply chain concentration risks and disruptions have played out substantially, Sitharaman said, emphasizing the need for businesses to have investments spread out in various countries.
“You need to have market access in different countries. You also need to have bilateral arrangements given the prevailing situation. India has been successfully negotiating bilateral treaties with very many countries,” the minister said, referring to the deals concluded with the UAE and Australia.
“So, EU FTA is top of our priority, also because of the traditional links that we’ve had with the EU, just as the traditional links we have had with the UK.”
Sitharaman said she was not revealing anything about the ongoing negotiations, but it is in the public domain that except for one or two items on which each side is fixated, the India-EU deal is mostly final. So, if the negotiations go forward with that spirit, it is not impossible to conclude the deal by the year-end, she said.
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Sitharaman also told her counterparts from Finland, Fiji and Italy and ADB President Masato Kanda participating in the conference that India’s approach on supply chains has not been one of short term.
“We’ve taken a long-term approach. Our approach is to strengthen ourselves more on the basis of the assets that we have, whether it is in the form of human capital or technology in which we have a lead, and also in sectors in which we think we can build further,” she said.
Looking at the levers which India want to fully use, whether it is technology or manpower, the government’s policies have been tailored to support manufacturing and the services sector in which the country enjoys a lead, she added.
In response to a question on EU’s carbon border adjustment mechanism, a policy to subject imported goods to the same carbon pricing as domestically produced goods, Sitharaman said the border tax will make things difficult for Indian exporters. Sitharaman described it as the EU’s way of finding resources to make its domestic industry greener by taxing imports.
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If the collective effort is to get the world greener, global economy has to become greener, the minister said, adding that one region wanting to get its industry greener by depleting others, amounts to a repetition of colonialism. “This can no longer be the spirit with which international cooperation and trade can happen,” Sitharaman said.
The writer is in Milan at the invitation of the ADB.
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