An EU-India Free Trade Agreement would provide a much needed jolt to global growth and could triple bilateral trade to a staggering EUR160 billion by 2015. Alec van Gelder and Phillip Stevens argue in Mint (India) that this mutually beneficial agreement could be an early highlight of the great recovery in 2010.  But important obstacles remain.

The EU is India’s most important export market and bilateral trade has increased by 1750 per cent since 1980, following a period of Indian trade liberalisation in the 1990s. And yet there are many more gains to be made by further freeing trade.  “...calculations from PricewaterhouseCoopers estimate that [if an FTA was established] the Indian textile industry would grow by 46%, boosting employment amongst India’s massive pool of low-skilled workers. European-based businesses can also expect to increase exports to the subcontinent by as much as 60%, relieving pressure on some of the more heavily indebted members of the EU.”

In spite of these impressive benefits obstacles remain to the FTA.  Three potential road blocks are the niggling disputes over special protection, the EU’s request that India adopts unnecessarily stringent new labor regulations, and a petty spat over intellectual property rights, stoked by an unholy coalition of anti-trade NGO’s and Indian generic medicines producers.

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