What are the main challenges in negotiating Free Trade Agreements between India and major economies like the EU and U.S.?

Negotiating Free Trade Agreements (FTAs) between India and major economies like the EU and the U.S. is a complex process due to differing economic interests, regulatory standards, and developmental priorities. Both sides have to balance domestic concerns with the potential benefits of increased trade, leading to several challenges in the negotiation process.

• Market Access and Tariff Reduction: India often seeks greater access for its goods and services, but faces demands from the EU and U.S. for deeper tariff cuts and removal of non-tariff barriers, which can impact sensitive sectors like agriculture and textiles in India.
• Intellectual Property Rights (IPR): The EU and U.S. push for stronger IPR protection, including patents for pharmaceuticals, which India resists to safeguard affordable medicines and public health interests.
• Labor and Environmental Standards: Developed economies emphasize strict labor rights and environmental standards, while India argues for flexibility, citing its developmental needs and the risk of higher compliance costs for its industries.
• Services and Mobility of Professionals: India wants easier movement for its professionals (like IT workers), but faces resistance due to visa restrictions and domestic employment priorities in the EU and U.S.
• Investment Protection: Disagreements exist over investor-state dispute settlement mechanisms and the level of protection for foreign investments, with India seeking to avoid clauses that could undermine its policy space.
• Data Protection and E-commerce: The EU and U.S. have advanced rules on data privacy and cross-border data flows, which differ from India’s approach focused on data localization and digital sovereignty.
• Agricultural Subsidies and Standards: The EU and U.S. have strict sanitary and phytosanitary standards that can limit Indian agricultural exports, while India is cautious about opening its market to subsidized agricultural imports.
• Regulatory Harmonization: Differences in product standards, certification, and regulatory frameworks require significant alignment, which can be difficult and time-consuming.
• Geopolitical Considerations: Strategic interests, such as concerns over China’s influence or domestic political pressures, also shape the pace and direction of negotiations.