00:00We can now bring in Chetiji Bajpayee, a senior research fellow for South Asia in the Asia-Pacific program at Chatham House.
00:07Thank you so much for joining us on the program today.
00:09Now, anyone who's traveled to India knows that if you buy olive oil or the most basic of French wines, it's going to cost you a small fortune.
00:17When will Indians start seeing the benefits of this deal?
00:22Well, the benefits will probably not be seen at the earliest until last year.
00:28So, you know, there are some caveats, of course, to this deal.
00:31Several politically sensitive sectors, such as agriculture, have been excluded.
00:36The deal is perhaps not as comprehensive as the EU may have liked.
00:40You know, there are fewer provisions on environmental and labor standards.
00:43And it, of course, still needs to undergo the ratification process by India's cabinet and the European Council and Parliament.
00:49So it is a bit of a tricky process, as we noted by the decision to postpone the ratification of the EU's trade deal with the Mercosur countries.
00:58So the deal will not really come into force before next year.
01:01And there are also ongoing negotiations for investment protection and geographical indication.
01:06So it's still a work in progress, I would say, to some degree.
01:09Now, both sides seem to be eager to sell this deal as the mother of all deals, they're calling it.
01:15But one can't help but notice that they have been pushed together, the EU and India, as they grapple with how to deal with a very unpredictable Donald Trump.
01:23Yeah, I agree. I mean, the deal needs to be viewed in a broader context.
01:28It signals a continued commitment to trade liberalization, both by Brussels and New Delhi, as both face pressure from the Trump administration's aggressive use of tariffs as a tool of U.S. foreign policy.
01:40But I would also add a caveat to that, that the India-EU relationship is not merely a knee-jerk reaction to Trump's actions.
01:48There's been a long-standing history of interactions between India and the European Union.
01:53The trade negotiations, as you noted, have been going on since 2007.
01:57They stalled in 2013 and resumed in 2022.
02:00And they both have been strategic partners since 2004.
02:04But the Trump factor, I think, has clearly added urgency to these interactions and helped to push the deal over the line.
02:11And what do people in Europe gain from this deal?
02:14Well, I would argue that it is a win-win deal overall.
02:18It's going to slash tariffs on over 90% of EU's exports to India.
02:23The automobile sector in particular will be a particular beneficiary.
02:26India is the world's third largest car market after the U.S. and China.
02:31And we're going to see levies reduced from over 100% to, as we heard, less than 40%.
02:38And then there are also going to be tariffs on European food products, including wine, machinery, chemicals, pharmaceuticals.
02:45They're all going to be reduced or removed to some degree.
02:48Now, the EU's top brass is in India just a month after the Russian president Vladimir Putin.
02:53New Delhi hasn't really turned him into a pariah and it continues to do business with Moscow.
02:58Is this something that the EU is going to have to overlook?
03:01And does India realize its relationship with Russia has limitations?
03:05Yeah, I think you allude to what is one underlying, one of several, I would say, underlying fault lines in the India-EU relationship.
03:12And that is, you know, both sides' relations with major powers, including Russia.
03:17Russia remains a key strategic partner for India, both for practical and ideological reasons.
03:22Over 50% of India's in-service military platforms are of Russian origin.
03:27India, given its price-sensitive and energy-hungry economy, it has been heavily dependent on Russian crude oil imports,
03:34although they have dropped over the last few months.
03:35But I think there is a, you know, that risk does remain in the relationship.
03:41That as the war potentially drags on in Ukraine, that scrutiny of the India-Russia relationship has to some degree grown.
03:49We've seen India as the second largest provider of restricted critical technologies to Russia after China.
03:56Several EU sanctions packages on Russia have included Indian entities.
03:59So I think that is a potential fault line in the India-EU relationship.
04:04Now, the two sides also signed a mobility pact for students and workers.
04:08What does this entail exactly?
04:11And how important is it, given the crackdown we've seen on H-1B visas in the United States?
04:17So I think the mobility issue is also another one of those fault lines.
04:23I think Indians are, for skilled Indian workers, are seeking greater access to the EU market.
04:28But I think it alludes, again, to the broader point that beyond trade, beyond, in addition to the FTA,
04:34that you are seeing this more emergence of a more multidimensional relationship.
04:38You're seeing a new security and defense partnership and a strategic agenda being unveiled in the relationship.
04:44It builds on earlier accomplishments, such as the Trade and Technology Council between India and the EU,
04:49which was established in 2023.
04:51India, of course, being only the second country with which the EU has a Trade and Technology Council,
04:57the other being the US, and this new EU-India strategic agenda,
05:01which was endorsed by the European Council in October.
05:04Okay.
05:04We'll see how this deal pans out in comments coming into us.
05:08The Indian Trade Minister hopes the deal can enter into force within this calendar year itself, 2026.
05:15So we'll see if that does pan out.
05:17We're going to have to leave it there, JT Bajpai.
05:19Thank you so much for joining us on the...
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