New Delhi: Days after India concluded its historic Free Trade Agreement (FTA) with the European Union (EU), Union minister for commerce and industry Piyush Goyal said that the country can now look at moving towards a closure of the bilateral trade negotiations with the US as no “sticky issues” remain.
In an exclusive interview to Hindustan Times, Goyal described a definitive shift in New Delhi’s trade strategy – from the protectionist hesitations of the past to confident negotiations for a future $30 trillion economy – and asserted that for a developed India, engagement with the developed world is not optional.
“You cannot live in isolation,” he said.
We reproduce here the whole interview.
Did you find the Europeans more receptive over the last six months?
No, they have been consistent. They have always worked towards this very sincerely and seriously, right since 2022 when we started the negotiation. I found that they had made up their mind that they have to do a deal with India.
And we were also quite clear that if you have to become a developed nation, you have to engage with the developed world. You cannot live in isolation.
There was a slack in 2024. Because we went into election, then they went into election. Then towards September-October (2024), once their new government came in, they appointed their best commissioner – their oldest serving commissioner – Maroš Šefčovič, a very seasoned man. And they told us that he is being appointed because he is the guy who can take us across the finishing line. That was about a year and four months ago. He personally met me 10 times. So, their commitment was throughout, and they were sensitive to our sticky issues.
What was the approach to handling sensitive issues?
That was one of the first things we decided – that both sides would keep the sensitive issues aside. They also had their sensitive issues.
Do you think the timeline for ratification is achievable?
We have said it will happen this year, in 2026. There’s legal scrubbing. In normal course, it takes four months. Then, it needs to go to their parliament.
The German Chancellor recently stated that the agreement must be completed as quickly as possible to create the largest internal market in the world after China…
I think they are pretty much on board.
Are you happy with how the carbon issue and CBAM (Carbon Border Adjustment Mechanism) have been handled?
Yes. They recognise and are cognisant of our work towards climate change issues, so there will be good support for us.
There is no more expansion [of CBAM]; I don’t think you will find that. If the expansion causes us to lose any business, there is a non-violation clause in the agreement. We have taken care of everything.
Regarding mobility, is there a pathway for Indian talent?
There is an agreement. Each individual EU member state has the competence to decide how many people and which type of people. The MEA is in active dialogue, and some – like Germany – have concluded the mobility part. Every country has a shortage of skilled legal immigrants. India’s best bet is that we always offer very highly skilled talent, and we encourage legal immigration.
We don’t send people illegally like other countries. So that’s why they are keen to have Indian workers, and Indians don’t create local problems. Most Indians obey the laws. No country in the world has complained that Indians have caused a problem for them.
These two big FTAs that you have done – UK and then EU – what are the big learnings?
One of the biggest differences between the past and today is that India is a respected country. People see political stability, they see macroeconomic stability, they see decisive leadership. They recognise the talent and skill that India has. So, now there is a want and a desire from the other side equally to do business and engage with India.
Second, India now goes from a position of strength, with confidence. Earlier, we would be negotiating on the current economy, which is a wrong strategy. PM Narendra Modi has changed this. Modiji has said, “You are negotiating the future FTA.” The past is not material. Today’s $4 trillion economy of India is not material. Our $30 trillion economy in 2047 is what you are negotiating. And that is what is attracting the people on the other side.
So, now when I negotiate, I negotiate either as an equal or as the person who’s got more to offer than to receive. And therefore, we get super deals.
Have we also become more pragmatic in how we negotiate? For instance, at one point in time we used to get obsessive about wines when it came to the EU.
I wish we had done this FTA 20 years ago. How much opportunity we’ve lost, I can’t tell you. How many millions and millions of jobs we have lost? How many billions of dollars of foreign exchange earnings we must have lost in 20 years because we didn’t do this deal?
Now you tell me – wines? There are only 6,000 grape farmers who make wine grapes. The total production is hardly Rs 1,000 crore. More than that, I got a duty-free quota in table grapes.
So it was not only weakness – it was lack of knowledge and lack of understanding of what you are protecting and what you are saving versus what you are losing by not doing the work.
So frankly, I think it’s a case of lost opportunities – huge lost opportunity and huge benefits India could have got.
What about automobiles? You seem to have been able to insulate the domestic industry?
90% of our market – the selling price is about Rs 20 lakh.
They can’t sell anything below that. It costs €15,000 for an ICE [Internal Combustion Engine] engine. On top of that, you have clearing, forwarding, you have marketing cost, you have showroom cost, you have after-sales service, dealer margin, then GST.
They can’t make a car below €15,000. Forget selling – they can’t make it.
To what extent is the EU deal going to boost manufacturing in India, specifically regarding labour-intensive sectors?
Hugely. In most sectors, we got zero duty from day one. Out of the labour-intensive exports of $35 billion, $33.5 billion became zero duty on the first day.
Bangladesh exports $30 billion to the EU versus our $7 billion.
Bangladesh was an LDC (Least Developed Country) with zero duty. We had MFN (Most Favoured Nation) duty and were paying up to 12% duty. Now, we are at zero. Just textile exports alone can be $40-50 billion; EU imports $253 billion.
How do we build our capacity and quality to meet this demand?
If we can export $7 billion, we can export $70 billion. Our quality will improve as the demand increases. I have been an advocate, following Prime Minister Modi, who has been talking about quality for 14 years.
With Prime Minister Mark Carney coming in March, where does the Canada deal stand? Do you have to start from scratch?
They are very keen to speed it up. We are working with them on the terms of reference. But, we have to start from scratch.
Is the UK deal a template for how we do deals in the developed world?
The UK one was a fantastic deal. This EU FTA is also equally good. However, very rarely can you just emulate one deal because the conditions, economy size, and interests of each country matter. Each deal stands on its own legs.
What is the status of the US deal? Are there any sticky issues left? And when will it be struck?
It is a positive, good deal. We are actively engaged. We never do any deal with a deadline in mind; when both sides are satisfied, the date will be announced. I don’t think there are any sticky issues left to be resolved. We can now look at moving towards closure.
Despite tariffs levied by the US last August, overall exports have seen positive growth. What have we done well?
There is a greater consciousness that people have to move out of their comfort zone and look for new markets and products. New exporters are emerging, and service exporters are evolving into new-age technologies.
What is next on your agenda?
We are focused on promoting manufacturing and services in a big way. We will continue to give a big push to innovation, R&D, startups (tech, agritech, biotech), and logistics. International engagements will continue with aligned partners, particularly the developed world.
Have you done internal modelling on how much FDI will flow into India as a result of this EU deal?
We do a lot of modelling, but we’ll wait for the agreement to come into effect to see how Indian industry grabs the opportunity. They have to expand, invest in technology, and skill their workforce. We are working with export promotion councils and chambers of commerce to disseminate the advantages of the eight FTAs we have done so far. Export-driven growth is vital; no country has become developed without international engagement.
Do you have a plan for the textile industry in terms of capacity building?
We are working very closely both with our export promotion councils, our line ministries, and very often through chambers of commerce – both at the Centre and in the states. We will take it down to the last level and encourage more and more people to look at international markets. Because if you look back at India’s performance in overall GDP growth – it’s been higher every time exports have performed. In fact, no country in the world has become a developed country without international engagement.
