Under Prime Minister Narendra Modi’s leadership, the Union government has only done free trade agreements (FTA) with developed economies countries that complement India, Commerce and Industry Minister Piyush Goyal said on Friday, contrasting it them to the ASEAN-led RCEP that he blamed the UPA government for beginning negotiations with. In an interview to The Hindu, Mr. Goyal said that the EU FTA was done quickly because he has the “confidence and guidance” of the Prime Minister.Edited excerpts:
Did the EU-India FTA get fast-tracked because of [concerns over] U.S. measures like tariffs?
Not at all. We are able to do [FTA deals] fast because we are very clear in our mind. We don’t have any ambiguity in our thinking or in the leadership.We completed deals with the UAE and New Zealand quickly, and there was no pressure there.
Prime Minister Modi is very confident that India should become a developed country by 2047. If we have to be a developed and prosperous country, we have to open and engage with the world. No country in the world has become a developed country by shutting its doors or looking inward.
The EU FTA engagement started in 2021 and in mid-2022, we launched and [began negotiations]. So, they took the decision way before any other circumstances came up, to speed up the FTA.
EU leaders said that the FTA is a “political message” to those who are increasing their tariffs right now… Don’t they mean the U.S.?
They may look at it that way, we don’t look at it that way. The growth story of India is the message. We don’t have to give any new messages beyond that.
The deal also includes a provision on the Carbon Border Adjustment Mechanism (CBAM). How was that worked out?
We all discussed and worked on this deal with a spirit of accommodation and trust in each other. Today, they trust the political stability they’ve seen in India and that trust helps us to speak as friends, even jostle and argue and fight as friends, but knowing full well that it’s all in the best interests of both countries and expanding engagement between both countries.
Would it be correct to say this is a pragmatic dea,l but maybe not the “mother of all deals”? It leaves out issues like sensitive agricultural products…
All my deals are pragmatic. It’s silly to have a deal that is not pragmatic. They [the EU] did a deal with Mercosur [a South American grouping] in 2019, and it took them six years to approve it. In all my deals, we start by laying out the red lines on their side and on our side and we decide to capture the low-hanging fruits. Why do you want to struggle over things which are not going to happen? So, we are smart negotiators, and we’ve been successful.
Do you expect the same kind of trouble that they’ve had with the Mercosur FTA, with France, for example, over agricultural issues?
No, no. All 27 countries have welcomed it. France is in fact at the forefront of demanding that we close this deal quickly. They have demanded it. They are demanding that we operationalise it fast, so there’s some talk that we should use AI to translate it to 24 [European] languages.
Are you hopeful that many exporters of apparel and jewellery hit by the U.S.’s 50% tariffs will be able to benefit now from the FTA with the EU?
The potential [of the EU FTA] on labour intensive sectors, where we’ve got huge wins, is about $35 billion. Out of the $35 billion, $33.5 billion will become 0% duty on day 1. All these years, there have been questions of why Bangladesh earns $30 billion in exports to the EU and India cannot do it, why Vietnam has such high exports to EU. The logic was simple. Bangladesh had 0% duty, being a Least Developed Country (LDC) and Vietnam had an FTA.
Will the EU-India FTA be wrapped up in 2026?
Yes, it will be implemented in calendar year 2026. In fact, while we [Indian and European teams] were having informal discussions over lunch, that’s when this issue came up: We should look at faster operationalisation, they said. We are ready to operationalise. We’ve already got Cabinet approval.
Is it now time to reassess India’s walkout from the Regional Comprehensive Economic Partnership (RCEP)?
RCEP was the most stupid decision that the UPA government had thrown India into. It was an anti-national act to throw us under the bus and put us through RCEP negotiations. Originally, RCEP never included India. It was China, the 10 nations of ASEAN, Japan, South Korea, Australia and New Zealand. We already had an FTA with ASEAN, Japan, and Korea, all very poorly negotiated. Till date, we have not been able to grow our exports there.
RCEP was basically an FTA between China and India, which would have demolished India’s manufacturing sector, it would have demolished the MSMEs. We would today have been an importing nation, with no jobs in manufacturing. We would have become a B-team of China, as have many other RCEP nations which have seen a huge increase in imports from China post-RCEP.There’s no question of revisiting our decision.
We are doing deals with developed nations. We have done eight FTAs in this government, covering 37 countries. All of them are with developed nations. We have not done deals with our competitors.
Regarding the UAE FTA, there was a lot of promise but the latest studies say that exports have remained more or less the same while imports have doubled…
The imports have increased in what we are in any case going to import: oil and gold. We have given a concession to them in gold because there was no other way we could balance the FTA. They have nothing to offer us except dates, nothing that they can export. Regarding our exports, look at the figures the day the FTA came into force and today, and you’ll see a massive increase in non-gold and non-petroleum exports. So, our interests are in those sectors because those are the job-creating sectors.
