In a stunning turnaround, India and the European Union recently revived negotiations for a free trade agreement after talks halted nearly a decade ago — and observers say it could have been driven by "unprecedented urgency."
Current geopolitical concerns appear to have forced both sides to iron out their differences and pursue a trade deal, though the decision to resume talks was made a year ago.
"I don't think these negotiations are going to be easy, even now. But necessity can be the mother of invention. There is indeed an unprecedented urgency to deepening India-EU ties," said Amrita Narlikar, professor and president of the German Institute for Global and Area Studies (GIGA).
The fresh impetus is mainly due to "the authoritarian advance on the borders of both EU and India," she added, referring to Russia's war on Ukraine, which has brought the threat directly to Europe's border.
For India, it's the increasing military confrontations with China along their shared border, which escalated in 2020 when soldiers from both sides clashed and more than a dozen were killed. "The seriousness of new geoeconomic threats, which have most recently involved the weaponization of energy and food supplies for strategic purposes, reveal that we need more reliable value chains," Narlikar, who is also an honorary fellow of Darwin College at the University of Cambridge, told CNBC.
"Sharing political values of democracy and pluralism, India and the EU can and should invest in the FTA, not only for trade gains but also for security gains," she added.
The deal is expected to double trade between India and the EU in the next five years, from an estimated $115 billion in 2021, according to the Economic Intelligence Unit.
India's Commerce and Industry Minister Piyush Goyal and European Commission Executive Vice President Valdis Dombrovskis formally relaunched the negotiations in Brussels in June.
"Both partners are now resuming the FTA talks after a gap of about nine years since the earlier negotiations were left off in 2013 due to difference in the scope and expectations from the deal," India's Ministry of Commerce and Industry said.
The next round of negotiations is scheduled to take place in Brussels in September. The first round of talks took place between June 27 and July 1 in New Delhi.
High level meetings appear to have accelerated the discussions and helped lead to a clearer roadmap for the trade negotiations.
In May, Indian Prime Minister Narendra Modi visited Germany, Denmark and France, while European Commission president Ursula von der Leyen made a trip to New Delhi in April.
Still, India is known to be wary of trade pacts and has walked away from previous deals before.
But necessity can be the mother of invention. There is indeed an unprecedented urgency to deepening India-EU ties. - Amrita Narlikar GERMAN INSTITUTE FOR GLOBAL AND AREA STUDIES
It's mainly due to concerns that such deals could prove detrimental to domestic producers, since they will have to compete against relatively cheaper goods coming in from other markets.
In 2019, Modi took a decisive step and withdrew India from the Regional Comprehensive Economic Partnership. It was the world's largest free trade pact, which brought the 10-member Association of Southeast Asian Nations, together with China, Japan, South Korea, Australia and New Zealand.
But recent trends and current developments seem to indicate that the "Modi government is gearing up to be a part of the regional and multilateral architecture," according to Rahul Mishra, senior lecturer at the Asia-Europe Institute of University of Malaya in Kuala Lumpur.
Read More at www.cnbc.com/amp/2022/07/18/india-and-eu-revive-stalled-fta-talks-as-global-tensions-spark-urgency.html