Commerce and Industry Minister Piyush Goyal on Friday said that India and the European Union (EU) should sign an “outcome-oriented” and “meaningful” free trade agreement (FTA) by removing “extraneous items” from its ambit.
“When we bring in too many extraneous items, which have no relevance to trade and business, to FTAs… we get cornered into slow progress,” said Goyal at the launch of the Federation of European Business (FEBI) in the country.
Goyal also highlighted that the EU’s deforestation regulation and carbon tax are unfair, which would impact Indian industries, and stated that the union’s safeguard measures on some steel products are “irrational”.
“Unfair trade rules around deforestation, like the Carbon Border Adjustment Mechanism (CBAM), are disrespectful of the Paris Agreement, where the developed world was supposed to provide grants to the developing countries and act responsibly,” the minister said.
Several major agricultural-exporting countries, such as Brazil, India, and the US, have voiced opposition to the EU Deforestation Regulation (EUDR).
Adopted on May 16, 2023, the EUDR aims to prevent the import of certain goods linked to deforestation and forest degradation into the EU market. Products covered under this regulation include coffee, leather, oil cake, wood furniture, and paper.
According to the Global Trade Research Initiative (GTRI), India’s exports of products worth approximately $1.3 billion annually to the EU could be affected by the EUDR.
India has also raised strong objections to the EU’s Carbon Border Adjustment Mechanism (CBAM), which proposes an additional duty on imports from seven carbon-intensive sectors, including steel, cement, fertilisers, aluminium, and hydrocarbons.
This “carbon tax” is set to take effect on January 1, 2026. Earlier this week, Finance Minister Nirmala Sitharaman voiced concerns regarding the CBAM, stating that it is “unilateral and arbitrary”.
“The world today can’t work on the principle of retaliation, but on mutual cooperation. Despite several efforts, cooperative elements have not taken centre stage as yet,” said Goyal. In September, India had proposed the imposition of retaliatory customs duties on certain goods imported from the EU.
“India does not have unfair trade practices; why should we be subject to that additional duty? Now, after six years, we have to take other measures,” Goyal said, adding that those measures are “not going to be conducive for the kind of good relations that we believe Europe and India share.”
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