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9 Feb 2026·Source: The Indian Express
4 min
EconomyInternational RelationsEDITORIAL

EU and US Trade Deals Offer New Opportunities for India

Trade agreements with EU, US can boost India's economic growth.

EU and US Trade Deals Offer New Opportunities for India

Photo by Suraj Tomer

Editorial Analysis

Trade agreements between the EU and the US, such as the EU-India trade deal and the Indo-Pacific Economic Framework for Prosperity (IPEF), can significantly benefit India by connecting it to the world's largest markets, reducing tariffs, promoting fair trade practices, and creating new economic opportunities.

Main Arguments:

  1. EU-India trade deal and IPEF can benefit India.
  2. These deals connect India to the world’s largest markets.
  3. The agreements aim to reduce tariffs and promote fair trade practices.
  4. These deals can create new economic opportunities for India, potentially boosting its GDP and exports.
  5. India needs to leverage these agreements to enhance its trade competitiveness.

Conclusion

India must leverage these trade agreements to enhance its trade competitiveness and fully realize the potential benefits.

Policy Implications

India needs to focus on improving its trade infrastructure, streamlining regulations, and enhancing the skills of its workforce to take full advantage of the opportunities presented by these trade agreements.
The article discusses how trade agreements between the EU and the US, such as the EU-India trade deal and the Indo-Pacific Economic Framework for Prosperity (IPEF), can benefit India by connecting it to the world's largest markets. These deals aim to reduce tariffs, promote fair trade practices, and create new economic opportunities for India, potentially boosting its GDP and exports. The article emphasizes the importance of India leveraging these agreements to enhance its trade competitiveness and integrate further into the global economy.

UPSC Exam Angles

1.

GS Paper 2: International Relations - Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests.

2.

GS Paper 3: Economy - Trade agreements, their impact on the Indian economy, and related policies.

3.

Potential question types: Statement-based MCQs on trade agreements, analytical questions on the benefits and challenges of FTAs.

Visual Insights

Indo-Pacific Economic Framework (IPEF) Member Countries

This map shows the countries participating in the Indo-Pacific Economic Framework for Prosperity (IPEF), highlighting the strategic importance of the region for India's trade opportunities.

Loading interactive map...

📍India📍United States📍Japan📍Australia
More Information

Background

The concept of free trade agreements (FTAs) has evolved significantly since the establishment of the General Agreement on Tariffs and Trade (GATT) after World War II. GATT aimed to reduce tariffs and trade barriers globally. Over time, countries began forming regional trade agreements and bilateral FTAs to deepen economic integration beyond the scope of GATT. These agreements often include provisions on intellectual property, investment, and services, going beyond just tariff reduction. The evolution of FTAs reflects a shift from multilateralism to regionalism in international trade. The establishment of the World Trade Organization (WTO) in 1995, which replaced GATT, aimed to strengthen the multilateral trading system. However, the slow progress in multilateral negotiations has led to a proliferation of regional and bilateral trade agreements. These agreements can offer quicker and more tailored solutions for participating countries, but they also raise concerns about potential trade diversion and the fragmentation of the global trading system. India's engagement with FTAs has grown over the years. Initially cautious, India has increasingly embraced FTAs as a tool for enhancing its trade competitiveness and integrating into the global economy. Key agreements include the ASEAN-India Free Trade Area and agreements with countries like South Korea and Japan. These agreements have aimed to reduce tariffs, promote investment, and facilitate trade in goods and services. The success of these agreements has varied, with some facing challenges related to implementation and market access. The legal framework for international trade in India is primarily governed by the Foreign Trade (Development and Regulation) Act, 1992. This act provides the government with the power to formulate and implement foreign trade policy. The Directorate General of Foreign Trade (DGFT) is responsible for implementing the policies and procedures related to foreign trade. India's trade policy also needs to be consistent with its obligations under the WTO agreements.

Latest Developments

Recently, there has been a renewed focus on trade agreements involving India, particularly with the EU and the US. The EU-India trade deal, officially known as the Trade and Technology Council (TTC), aims to enhance cooperation in areas such as digital technology, clean energy, and trade. Negotiations are ongoing to address issues like tariffs, intellectual property rights, and market access. This deal is expected to boost trade and investment between the two regions. The Indo-Pacific Economic Framework for Prosperity (IPEF) is another significant development. IPEF, led by the US, includes several countries in the Indo-Pacific region and focuses on areas such as trade, supply chains, clean energy, and fair economy. While IPEF does not involve tariff reductions, it aims to establish common standards and frameworks to promote economic cooperation and resilience. India's participation in IPEF reflects its commitment to engaging in regional economic initiatives. Looking ahead, India is expected to continue pursuing trade agreements with various countries and regions. The government has set ambitious targets for increasing exports and attracting foreign investment. These trade agreements are seen as crucial tools for achieving these goals. However, challenges remain, including addressing domestic concerns about the impact of trade liberalization on certain sectors and ensuring that trade agreements are aligned with India's development priorities. Several institutions play a key role in shaping India's trade policy. NITI Aayog provides policy inputs and recommendations on trade-related issues. The Ministry of Commerce and Industry is responsible for formulating and implementing trade policy. The Export Promotion Councils work to promote exports from specific sectors. These institutions collaborate to ensure that India's trade policy is effective and aligned with its economic goals.

Frequently Asked Questions

1. What is the main idea behind the EU-India Trade and Technology Council (TTC)?

The EU-India Trade and Technology Council (TTC) aims to boost cooperation in areas like digital technology, clean energy, and trade between the EU and India. Negotiations are ongoing to resolve issues such as tariffs and market access.

2. How can trade agreements with the EU and US potentially benefit India's GDP?

Trade agreements like the EU-India deal and IPEF can reduce tariffs and promote fair trade, creating new economic opportunities for India. This can lead to increased exports and overall economic growth, thus boosting India's GDP.

3. What are the potential challenges for India in leveraging trade agreements with the EU and US?

India may face challenges related to tariffs, intellectual property rights, and market access during negotiations. Successfully addressing these issues is crucial for maximizing the benefits of these trade agreements.

4. What is the Indo-Pacific Economic Framework for Prosperity (IPEF), and how does it relate to India?

The Indo-Pacific Economic Framework for Prosperity (IPEF) is a trade agreement involving the US and other countries in the Indo-Pacific region. It aims to promote economic cooperation and integration, offering India opportunities to connect with major global markets.

5. How might increased trade competitiveness impact the common citizen in India?

Increased trade competitiveness can lead to more jobs, lower prices for consumers, and a wider variety of goods and services available in the market. This can improve the overall standard of living for common citizens.

6. What was the General Agreement on Tariffs and Trade (GATT), and why is it important in the context of current trade agreements?

The General Agreement on Tariffs and Trade (GATT) was established after World War II to reduce tariffs and trade barriers globally. It laid the foundation for modern trade agreements, including those India is currently negotiating with the EU and US.

7. What are the key areas of focus in the ongoing negotiations for the EU-India trade deal?

The key areas of focus include tariffs, intellectual property rights, and market access. These are critical for ensuring a mutually beneficial trade relationship.

8. Why are trade agreements with the EU and US considered 'high importance' for India's economy?

These agreements connect India to the world's largest markets, potentially boosting its GDP and exports. They also promote fair trade practices and enhance India's trade competitiveness.

9. How can India enhance its trade competitiveness to fully leverage the opportunities presented by trade agreements?

India can focus on improving its infrastructure, reducing bureaucratic hurdles, and promoting innovation to enhance its trade competitiveness. Investing in skill development and technology can also play a crucial role.

10. What is a key takeaway for UPSC Prelims regarding India's trade relations with the EU and US?

Remember that the EU-India Trade and Technology Council (TTC) and the Indo-Pacific Economic Framework for Prosperity (IPEF) are initiatives aimed at strengthening trade ties and offer potential economic benefits for India.

Exam Tip

Focus on the objectives and potential impact of these agreements.

Practice Questions (MCQs)

1. Consider the following statements regarding the Indo-Pacific Economic Framework for Prosperity (IPEF): 1. It is an initiative led by the United States with several countries in the Indo-Pacific region. 2. It primarily focuses on tariff reductions to promote trade among member countries. 3. India is a participant in the IPEF. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.1 and 3 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is CORRECT: The Indo-Pacific Economic Framework for Prosperity (IPEF) is indeed led by the United States and includes several countries in the Indo-Pacific region. Statement 2 is INCORRECT: IPEF does NOT primarily focus on tariff reductions. Instead, it aims to establish common standards and frameworks to promote economic cooperation and resilience in areas such as trade, supply chains, clean energy, and fair economy. Statement 3 is CORRECT: India is a participant in the IPEF, reflecting its commitment to engaging in regional economic initiatives.

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