By Sunjay J Kapur
As we strive to achieve India’s $2 trillion export target by 2030, we must prioritise the removal of tariff and non-tariff barriers that hinder the efficient flow of trade
In the domain of global trade, the alliance between India and Europe stands out for its vast potential and bright prospects. Exploring the forthcoming business and trade scenarios, particularly through the prism of free trade agreements (FTAs) with Europe, underscores the critical importance of acknowledging the collaborative efforts that drive us toward a stronger, more resilient partnership.
Towards this end, the historic India-EFTA Trade and Economic Partnership Agreement (TEPA) is the first FTA inked with a binding commitment from the European Free Trade Association (EFTA) countries to invest $100 billion in India. It is a promising development. India is currently engaged in active discussions regarding ongoing FTAs within Europe, including the recently signed EFTA agreement with Switzerland, Norway, Liechtenstein, and Iceland, as well as negotiations with the European Union and the UK, which are nearing finalisation.
The relationship between India and Europe is characterised by its depth and diversity, spanning historical, economic, and cultural dimensions. With Europe standing as India’s third-largest trade partner, the magnitude of our economic synergies cannot be overstated. Bilateral trade between India and Europe expanded significantly over the last decade, rising to $185.16 billion in 2022-23. India’s exports to Europe increased to $96.90 billion in 2022-23, while imports went up to $88.26 billion. India saw a trade balance of $8.65 billion with the European economy during 2022-23.
Against this backdrop, further discussions on a bilateral trade agreement between India and EU and India and the UK hold immense promise. However, our success in these negotiations hinges not only on economic considerations but also on our capacity to integrate ethical, environmental, and social dimensions into the framework.
By aligning our efforts in these areas, we can lay the groundwork for a partnership that not only drives economic prosperity but also fosters inclusive development and societal well-being. By incentivising collaboration between Indian and Europe businesses, the FTAs can pave the way for a mutually beneficial partnership. It is imperative, however, that Indian industries align their offerings with the demands of the European market to fully capitalise on this opportunity. By focusing on products with significant import potential in Europe, we can unlock new avenues for trade and investment.
The journey ahead necessitates a deeper level of collaboration, aligning policies and regulations while recognising the unique economic and social contexts of each region. Firstly, there is a need for collaboration across borders, sectors, and industries. Accelerating the transition to a circular economy requires the sharing of knowledge, resources, and best practices. Secondly, a pivotal aspect is the investment in innovation and infrastructure that supports circular practices, such as recycling, remanufacturing, and product-as-a-service models.
These practices not only diminish waste but also generate new business opportunities and jobs, thereby fostering economic growth. Particularly noteworthy are the areas of e-waste and packaging design-for-recycling, offering substantial opportunities for collaboration. The third crucial aspect is education and awareness. Shifting mindsets and promoting the adoption of sustainable practices among consumers, businesses, and governments are imperative. Cultivating a culture of responsibility towards our environment can create a powerful movement towards zero waste.
Yet, as we chart our course toward enhanced economic cooperation, we must also confront the challenges posed by evolving regulatory landscapes. Measures such as the Europe’s Carbon Border Adjustment Mechanism (CBAM) and Deforestation Regulation underscore a global shift towards sustainability.
While these regulations present obstacles for Indian exporters, they also emphasise the urgency for our industries to embrace sustainable practices and enhance compliance measures.
Looking ahead, it is clear that sustainable and inclusive growth will define the future of international trade. As we strive to achieve India’s $2 trillion export target by 2030, we must prioritise the removal of tariff and non-tariff barriers that hinder the efficient flow of trade. Diversifying trade relationships and increasing investment flows will not only spur economic growth but also create employment opportunities, knowledge-sharing, and foster shared prosperity.
To navigate the complexities of the future business and trade landscape, innovation will serve as our greatest asset. By embracing forward-thinking solutions, addressing challenges head-on, and demonstrating a spirit of collaboration, we can build a partnership that transcends borders and lays the foundation for a resilient and sustainable future.
The author serves as the Chairman of CII Europe Committee and also holds the position of chairman at Sona Comstar.
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