The Communist Party of India (Marxist) expressed its firm rejection of the country’s free trade agreement with the European Union (EU). The party called the deal a “wholesale surrender of India’s economic interest to the EU.”
The India-EU FTA was signed in the presence of Prime Minister Narendra Modi and EU Commission President Ursula von der Leyen during an India-EU business forum meeting in New Delhi on Tuesday, January 27.
European Council president Antonio Costa was also present during the signing ceremony.
The FTA, once implemented, will lead to massive reduction in tariffs on goods traded between both the economies. The EU hopes the deal will help it double its exports to India by 2032.
“We have created the mother of all deals. We have created a free trade zone of two billion people, with both sides set to benefit,” said Ursual von der Leyen in a post on X.
According to Modi, the FTA with the EU is the largest FTA in India’s history and it “will bring substantial benefits for the 1.4 billion people of India, make access to European markets easier for our farmers and small industries, create new opportunities in manufacturing.”
The EU is India’s largest trading partner as a group. Their bilateral trade in goods and services reached 208 billion USD in 2024.
The deal took almost two decades to reach the signing stage as both the economies were discussing it since 2007.
The deal comes at a time when both the economies are impacted by global trade disruptions caused by the Donald Trump administration in the US through arbitrary use of tariffs.
India is already facing a 50% tariff on most of its exports to the US. The EU too faces threats of similar tariffs.
The EU recently signed a similar trade deal with South American economic bloc Mercosur which was blocked by the European parliament. Last year it signed similar deals with Indonesia and Mexico as well.
India has also recently signed FTAs with countries like the UK, New Zealand, and Oman.
The India-EU FTA would take another six months to take its final shape. Both the countries hope to implement it within a year.
Complete surrender of India’s economic interests
As per the agreement, India will remove or reduce tariffs on over 96% of goods imported from the EU countries which includes machinery, alcohol, and processed food.
In return, the EU will reduce tariffs on almost all imports (99.5%) from India, including footwear, clothing, gems and jewelry, and seafood.
India will also gradually reduce the tariffs on European cars from its current 110% to 10% with an annual cap of 250,000, while tariffs on EU-made aircrafts and spacecrafts would be eliminated.
The India-EU free trade deal also talks about strengthening the India-Middle East-Europe Economic Corridor (IMEC) which was announced in September 2023 as a trade route between Asia and Europe.
While claiming lack of transparency from the government over the details of the deal, CPI (M) expressed apprehensions that the FTA with the EU will cause the massive destruction of livelihoods in the country.
It claimed the reduction in tariffs in mostly labor-intensive sectors in India would lead to the closure of Indian production, which will benefit the rich while wrecking “the livelihoods of workers, farmers, and common people.”
The long-standing pressure created by the farmers unions in India, though the FTA has kept out the dairy and some crucial agricultural products from its purview, still opens crucial sectors directly linked with agriculture.
Under the FTA, India has agreed to gradually eliminate all tariffs on several agricultural products imported from the EU, such as olive and vegetable oils, fruit juices, sheep meat, and processed food products.
CPI (M) also opposed the deal over India agreeing on Haifa in Israel as a key IMEC transit point under the deal.
CPI (M) claims that “at a time when the world is demanding Israel be declared an apartheid state and face sanctions for its genocidal aggression in Gaza, the Indian government is choosing to deepen ties with Israel through this FTA.”
This move by the government of India is “deplorable and should not be allowed,” CPI (M) asserted.
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