New Delhi, June 26 (IANS) India and the European Union have concluded their Free Trade Agreement as both partners seek to diversify their markets amid the global tariff turmoil and the geopolitical landscape after Donald Trump took over as US President, an article said.
“As countries seek to diversify away from risky dependencies without retreating from globalisation, trade agreements are increasingly becoming instruments of strategic trust as much as market access,” the article in Modern Diplomacy said.
In this environment, the most valuable trade agreements are no longer simply instruments for lowering tariffs; they are frameworks for building trusted economic relationships built on regulatory cooperation, it said.
It highlights that in the case of pharmaceuticals, India supplies affordable medicines to more than 200 countries and remains the world’s leading source of generics, yet the EU has absorbed only a modest share of that capacity. The FTA makes important tariff commitments in pharmaceuticals and medical devices. However, tariff elimination does not by itself produce market access as regulators, not customs schedules, determine the outcomes.
The article states that the same dynamic applies within Europe itself. Through structured regulatory cooperation, the agreement may, over time, encourage greater harmonisation of approval processes across the EU to improve market access while reinforcing the integrity of the single market. This assumes significance as Indian producers have held the grouse that they have to secure separate approvals in each member state.
Similarly, the EU’s Carbon Border Adjustment Mechanism (CBAM) became fully operational this year, and the FTA does not exempt India from it. India moved from threatening confrontation over the CBAM to negotiating the terms of engagement within it, which is consequential given how exposed its steel and aluminium exporters are. Whether that engagement converts into relief that the Indian industry can actually use remains open, a question the FTA’s text alone cannot answer, the article stated.
More broadly, the CBAM framework illustrates how trade agreements increasingly serve as vehicles for domestic reform on both sides. Just as India may use the agreement to accelerate industrial decarbonization, the EU will need to simplify aspects of its own CBAM architecture if cooperation is to function effectively, it noted.
It also points out that across twenty chapters of the agreement, an extensive architecture for consultation, transparency, regulatory dialogue, and institutional coordination has been established. The agreement contains as many as 125 cooperation provisions.
“Cooperation is the throughline across sectors from medical technology to clean energy to digital services; competitiveness increasingly depends on the ability of two systems to work together, not on one converging toward the other,” the article stated.
It further highlighted that for India, the gains extend beyond market access. As the country builds out manufacturing capacity, innovation infrastructure, and its case as a trusted supply-chain partner, Europe offers capital, technology, and research collaboration that pure export volumes alone cannot capture. The agreement will be supplemented in the coming months by a parallel agreement on investment protection and Indian participation in the EU’s Horizon Europe flagship research programmes. If used wisely, the agreement can propel India’s internal competitiveness and regulatory reform agenda, the article added.
The article also observed that for the EU, the agreement reflects a recognition that India is no longer simply an emerging market to be courted, or ‘just’ a counterweight to China, but a partner whose cooperation on carbon, on standards, and on supply-chain resilience Europe now actively needs. The agreement represents a belated recognition by the EU that India is its full equal, the article added.
–IANS
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