India-EU free trade deal explained: What it means for farmers and IT jobs

The India-EU trade deal boosts exports, jobs and farmers' income, and allows Indian professionals to work in the EU. Here are key FAQs on farming, services and mobility

India and the European Union (EU) on Tuesday signed a free trade agreement (FTA) at the 16th India-EU Summit held in New Delhi. The agreement, described as the “mother of all deals”, is expected to deepen trade, investment and cooperation between India and the EU. 

Under the FTA, more than 99 per cent of Indian exports, by value, will get improved access to the EU market. In return, the EU expects its exports to India to double by 2032, driven by lower duties and smoother market access. Once the pact comes into force, tariffs of up to 10 per cent on around $33 billion worth of Indian exports will be phased out. 

Below are key FAQs released by the Ministry of Commerce and Industry on the India-EU trade deal:

How will Indian farmers benefit from the India-EU trade deal?

The agreement is expected to significantly benefit agriculture and processed food exports. Market access will be available for products such as tea, coffee, spices, grapes, gherkins and cucumbers, dried onion, fresh fruits and vegetables, and processed foods. 

India has also protected sensitive areas including beef and poultry, dairy, fish and seafood, cereals such as rice and wheat, fruits and vegetables, nuts, edible oils, tea, coffee, spices and tobacco.

How does the FTA support recognition of Indian professional qualifications?

Both sides have agreed to identify professional services where mutual recognition agreements can be negotiated. They have also committed that if the EU signs a recognition agreement with any third country, it will begin similar talks with India in a time-bound manner.

How important is the services sector to the Indian and EU economies?

The services sector plays a major role in both India and the EU. In the EU, services account for about 73 per cent of gross value added (GVA). In India, the sector contributes around 55 per cent of GVA. 

How many services sectors are covered under India-EU commitments?

The India-EU trade agreement covers a wide range of services through specific commitments by both sides. 

India has secured commercially meaningful market access and national treatment from the EU in around 144 sectors and sub-sectors. These include key areas of interest such as IT and IT-enabled services, professional services, other business services, and education services. 

In return, India has offered similar commitments in 102 sectors and sub-sectors. These cover important EU priority areas such as maritime transport, financial services, telecom services, and environmental services.

What commitments have been made in financial services?

In financial services, both sides have agreed on obligations that could strengthen India’s fast-growing digital payments ecosystem. The deal opens up market access opportunities for Indian payment service providers and allows India to leverage its expertise in systems such as UPI. 

The agreement also supports cooperation in fintech innovation. For the EU, India has committed to allowing 100 per cent foreign direct investment in insurance and 74 per cent FDI in banking services. India has also agreed to permit 15 new bank branches over four years for EU banks.

What are the key commitments in telecommunication services?

The telecom services annex sets out a clear and balanced framework for cooperation between India and the EU. It includes rules on access to telecom networks, interconnection, use of essential facilities, submarine cable systems and competition safeguards. 

Both sides retain the right to set universal service obligations and manage limited resources such as spectrum and numbering.  ALSO READ | India-EU FTA: Brokerages decode impact for markets, sectors, companies

How will the deal help Indian traditional medicine practitioners?

 

The deal offers new opportunities for AYUSH practitioners in the EU. In member states where specific regulations are not in place, Indian practitioners will be able to offer services based on the professional qualifications obtained in India.

How long can Indian service providers stay in the EU?

Business visitors and short-term business visitors can stay for up to 90 days in any six-month period. 

Managers and specialists under intra-corporate transfers can stay for three years, extendable by two years under domestic laws. Trainee employees can stay for one year, extendable by two years. Contractual service suppliers and independent professionals can stay for a cumulative period of 12 months.