When India and the European Union finalized their free trade agreement in New Delhi earlier this year, the focus was more on regulatory cooperation than on reducing tariffs, as per a report by Vietnam Times. The agreement, spanning 20 chapters, sets up a robust framework for consultation, transparency, and institutional coordination, with around 125 cooperation provisions embedded within it.
In light of global economic uncertainties driven by geopolitical tensions, technological rivalries, and economic security issues, India and the EU saw the need for an FTA to navigate these challenges. Instead of solely aiming to lower tariffs, such agreements now serve as mechanisms for establishing reliable economic ties based on regulatory collaboration.
Despite India’s significant role as a global supplier of generic drugs, its access to the European market has been hindered not by tariffs but by regulatory hurdles such as approvals, pharmacovigilance, and compliance systems, the report highlighted. The essence of the FTA lies in securing commitments on tariffs for pharmaceuticals and medical devices while also stressing the importance of regulatory cooperation and trust among agencies under the agreement’s regulatory framework.
The FTA goes beyond addressing market access issues for India; it also paves the way for enhancing manufacturing capabilities, innovation infrastructure, and positioning India as a dependable partner in the supply chain. By fostering collaboration in areas like capital, technology, and research, Europe can play a crucial role in India’s growth trajectory.
The agreement also facilitates discussions on carbon pricing and industrial decarbonization, introducing a carbon-border annex and technical consultation mechanisms. This comprehensive approach not only benefits India in terms of market access but also aligns with its broader economic integration strategies with regions like the Gulf and Europe through initiatives such as IMEC, making these aspirations more viable in a commercial context.
