India red-flags non-tariff barriers, wants EU focus on market access

New Delhi: India has sought certainty from the European Union that the bloc will not impose new non-tariff barriers in future hurting the country’s interests. India’s insistence on such an assurance comes as the two sides assess the progress of their free trade agreement (FTA) negotiations, which restarted two years ago.

“We have said that any new regulations may bring uncertainty for us. This is something they recognise and agree with,” said an official.

The issue was discussed last week between senior officials of the two sides. India and the EU have exchanged their key demands under the FTA and now their commercial significance is being assessed, people aware of the talks said.

New Delhi is wary of barriers such as the Carbon Border Adjustment Mechanism (CBAM), which will impact several Indian exporters. It has conveyed to the EU that market access – for its goods and services, investment and government procurement – should be the focus areas of the talks.

Though the EU has said that CBAM is a part of climate action efforts, countries such as India are of the view that it is a trade-distortionary measure and protectionist. Under CBAM, domestic companies from seven carbon-intensive sectors including steel, cement, fertiliser, aluminium and hydrocarbons would have to seek certificates from the EU authorities to comply with norms. “Both sides want to converge – it is a positive signal,” said the official cited above. “We are getting stuck on rules on trade such as labour and sustainability.”

There are concerns that India’s gains in market access may get stymied by the sustainability measures. “So a comprehensive dialogue is underway, of which the FTA is a part,” the official said.Emphasising that tariffs and non-trade barriers are both covered in market access, the official said, “Market access should be the core, instead of talks getting embroiled all over.”