India-EU Free Trade Agreement
Indian Economy
- PYQs8
- Articles1
Background
Understanding India's trade policy, its economic integration with major global blocs, potential impact on various domestic sectors, and its role in shaping global trade architecture.
Free Trade Agreements (FTAs) are pacts between two or more countries to reduce or eliminate barriers to trade, such as tariffs and quotas, to facilitate the exchange of goods and services. The India-EU FTA aims to deepen economic ties between India and the European Union, one of India's largest trading partners.
Facts & tables
- Negotiation Status
- Negotiations for a comprehensive FTA between India and the EU were relaunched in 2022.
- Scope
- Aims to cover trade in goods, services, investment, government procurement, and intellectual property rights.
- Economic Impact
- Expected to significantly boost bilateral trade and economic cooperation.
- EU's Role
- The EU is one of India's largest trading partners and a major source of Foreign Direct Investment (FDI).
| Type | Reference |
|---|---|
| Conceptual area | International Trade |
| Conceptual area | Economic Diplomacy |
| Body | Role |
|---|---|
| European Union | Negotiates and implements |
| Government of India | Negotiates and implements |
Prelims angle
Prelims angle: Factual recall
Prelims angle: Terminology-based question
- Aims to reduce tariffs and non-tariff barriers.
- Covers goods, services, investment, IPR.
- Significant for India's economic growth and market access.
- Part of India's broader trade liberalization strategy.
- Negotiations relaunched in 2022.
| Year | Framing tags |
|---|---|
| 2026 | Multi-statement analysis, Conceptual understanding |
| 2023 | Multi-statement analysis, Factual recall |
| 2022 | Multi-statement analysis, Conceptual understanding |
| 2022 | Multi-statement analysis, Policy measures |
| 2020 | Multi-statement analysis, Factual recall |
| 2019 | Factual recall, Definition-based questions |
| 2018 | Factual recall, Cause and effect relationships |
| 2017 | Factual recall, Terminology-based question |
Timeline
-
International Trade
Conceptual area
-
Economic Diplomacy
Conceptual area
-
Prelims 2017
Factual recall, Terminology-based question
-
Prelims 2018
Factual recall, Cause and effect relationships
-
Prelims 2019
Factual recall, Definition-based questions
-
Prelims 2020
Multi-statement analysis, Factual recall
-
Prelims 2022
Multi-statement analysis, Conceptual understanding
-
Prelims 2022
Multi-statement analysis, Policy measures
-
Prelims 2023
Multi-statement analysis, Factual recall
-
Prelims 2026
Multi-statement analysis, Conceptual understanding
-
Ireland pretty hopeful of signing of EU-India FTA by year end: Irish Ambassador Kevin Kelly
The India-EU FTA is a crucial bilateral trade agreement aimed at liberalizing trade and investment between India and the European Union, reflecting India's strategy for economic integration and market access.
See also
Past papers
2017–2026 · 8 questions
In the news
Ireland pretty hopeful of signing of EU-India FTA by year end: Irish Ambassador Kevin Kelly
The India-EU FTA is a crucial bilateral trade agreement aimed at liberalizing trade and investment between India and the European Union, reflecting India's strategy for economic integration and market access.
Try these PYQs
Broad-based Trade and Investment Agreement (BTIA)’ is sometimes seen in the news in the context of negotiations held between India and
The Broad-based Trade and Investment Agreement (BTIA) is negotiated between India and the European Union (EU).
Which of the following is issued by registered foreign portfolio investors to overseas investors who want to be part of the Indian stock market without registering themselves directly?
Participatory Note (P-Note): This is a financial instrument issued by registered foreign portfolio investors (FPIs) to overseas investors. It allows overseas investors to participate in the Indian stock market indirectly without directly registering with the Securities and Exchange Board of India (SEBI). The FPI holds the underlying Indian securities, and the P-Note represents ownership for the overseas investor. The other options are not used for this purpose: Certificate of Deposit (CD): Issued by banks to raise short-term funds, not related to stock markets. Commercial Paper (CP): Short-term debt instrument issued by companies, not related to foreign investment in stocks. Promissory Note: A written promise to repay a debt, not used in this context of stock market participation.
With reference to the Indian economy, consider the following statements:
1. If the inflation is too high, Reserve Bank of India (RBI) is likely to buy government securities.
2. If the rupee is rapidly depreciating, RBI is likely to sell dollars in the market.
3. If interest rates in the USA or European Union were to fall, that is likely to induce RBI to buy dollars.
Which of the statements given below is/are correct?
Statement 1 is incorrect. Typically, the RBI uses open market operations to sell government securities to drain money from the system and control inflation. Buying government securities would inject money into the system, potentially fueling inflation further. Statement 2 is correct. Selling dollars in the market - If the rupee is rapidly depreciating, the RBI might intervene in the foreign exchange market by selling dollars from its reserves. This increased supply of dollars in the market can help stabilize the exchange rate and slow down the depreciation of the rupee. Statement 3 is correct. Lower interest rates in the US/EU make India a more attractive destination for foreign investment, leading to a large inflow of dollars. This causes the rupee to strengthen (appreciate). To prevent the rupee from appreciating too rapidly and hurting exporters, the RBI buys the excess dollars from the market.
With reference to foreign-owned e-commerce firms operating in India, which of the following statements is/are correct ?
1. They can sell their own goods in addition to offering their platforms as market-places.
2. The degree to which they can own big sellers on their platforms is limited.
Which of the above statements are correct?
Foreign e-commerce companies cannot directly sell their own goods through an inventory-based model in India. This is to ensure a level playing field for domestic sellers and protect small retailers. Marketplace model allows these companies to operate as online marketplaces, providing a platform for other sellers to list and sell their products. India amended its FDI policy in e-commerce marketplaces in 2018 to classify any vendor accounting for more than 25% of the platform’s total sales as controlled by the marketplace operator. So, no seller must exceed 25 per cent of the total business on any foreign e-commerce platform. So, statement 2 is correct. Note: UPSC officially give D as correct answer but as per us the correct answer should be B
Consider the following statements:
1. The value of Indo-Sri Lanka trade has consistently increased in the last decade.
2. “Textile and textile articles” constitute an important item of trade between India and Bangladesh.
3. In the last five years, Nepal has been the largest trading partner of India in South Asia.
Which of the statements given above is/are correct?
Statement 1 is not correct. Bilateral trade between India and Sri Lanka has increased by around 9 times between 2000-01 and 2018-19. Total trade between the two countries was US$ 6.2 billion in 2018-19, out of which India's exports to Sri Lanka were US$ 4.7 billion and imports were US$ 1.5 billion. Although India has always had a trade surplus with Sri Lanka, the gap has widened since 2008-09. In 2012-13 and 2016-17, the trade slumped, thus disturbing the steady increase in the graph. Statement 2 is correct. According to the World Bank, India exports $2.25 billion worth of textile and clothing products to Bangladesh. In turn, it imports $336 million worth of textile and clothing products from Dhaka. Statement 3 is not correct. Bangladesh is India's biggest trade partner in South Asia. Bilateral trade between India and Bangladesh has grown steadily over the last decade. India's exports to Bangladesh in FY 2018-19 stood at $9.21 billion and imports during the same period were at $1.04 billion.
Show 3 more PYQs
In what way(s) does the Vizhinjam International Seaport represent a structural shift in India's maritime trade and logistics policy?
1. By functioning exclusively as a domestic cargo hub to reduce reliance on coastal shipping and eliminate the need for foreign collaborations.
2. By focusing primarily on passenger cruise tourism and heritage shipping to increase Kerala's profile as a maritime heritage destination.
3. By leveraging its natural deep draft and strategic location to reduce dependence on foreign trans-shipment ports, enhance revenue retention, and reposition India in regional maritime trade.
Select the answer using the code given below:
Statement 1 is Incorrect: The Vizhinjam International Seaport is designed as an international container transshipment hub, not an exclusively domestic cargo hub. Rather than reducing reliance on coastal shipping, a transshipment hub relies heavily on a "hub-and-spoke" model, where large mother ships offload cargo that is then distributed to other Indian ports via smaller coastal feeder vessels. Furthermore, it actively seeks to attract foreign shipping lines and global integration, rather than eliminating foreign collaborations. Statement 2 is Incorrect: While the port has provisions for a cruise terminal, its primary focus is handling international container transshipment and multi-purpose cargo. It is not primarily focused on passenger cruise tourism or heritage shipping. Statement 3 is Correct: Vizhinjam leverages its natural deep draft of 18 to 24 meters, allowing it to berth Ultra Large Container Ships (ULCS) that previously bypassed Indian ports. Situated just 10 nautical miles from the busy East-West international shipping corridor, it aims to reclaim transshipment cargo historically handled by foreign hubs like Colombo, Singapore, and Jebel Ali. This structural shift reduces dependence on foreign ports, retains an estimated $200 to $400 million annually in transshipment revenues, and repositions India in regional maritime trade. Therefore, option D is the correct answer.
India enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 in order to comply with the obligations to
The World Trade Organization (WTO) has an agreement called the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). TRIPS requires member countries to protect Geographical Indications (GIs). GIs identify a product as originating from a specific geographical location where its qualities or reputation are essentially due to that origin. India enacted the Geographical Indications of Goods (Registration and Protection) Act, 1999 to comply with its obligations under the TRIPS agreement of the WTO.
Consider the following statements :
Statement-I : India accounts for 3.2% of global export of goods.
Statement-II :Many local companies and some foreign companies operating in India have taken advantage of India's 'Production-linked Incentive' scheme.
Which one of the following is correct in respect of the above statements?
* Statement I is incorrect: India's share in global merchandise trade is only 1.8% and 4% in global services. India plans to increase its export share in global trade from 2.1% to 3% by 2027 and 10% by 2047. * Statement II is correct: The PLI scheme is open to both domestic and international manufacturers. Samsung as well as Indian firms such as Dixon Technologies, UTL, Neolyncs, Lava International, Optiemus Electronics and Micromax are also expanding their factories to take advantage of the PLI scheme.