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India and the European Union (EU) may announce some progress in negotiations relating to a broad-based trade and investment agreement during the India-EU summit scheduled for 8 May.

Prime Minister Narendra Modi’s meeting with EU leaders in Portugal will be an opportune moment for both sides to announce a possible way forward, said Klas Molin, Sweden’s ambassador to India in a recent interview. “Clearly the EU would like to see a comprehensive free-trade agreement (FTA), including investment protection in it... It’s for the (European) Commission to negotiate but we would like to make progress," Molin said.

During the India-EU summit in July 2020 a high-level mechanism was set up with Union trade minister Piyush Goyal helming deliberations for India, while the executive vice-president and commissioner for trade Valdis Dombrovskis led the EU delegation. The two sides had last met in February for talks.

Terming the developments leading up to the high-level commission as "positive", the Swedish diplomat shared that there may be some announcements, given that the covid-19 situation does not act as a hindrance and the summit takes place, as planned.

“Sweden is heavily trade dependent. 50% of our gross domestic product (GDP ) is derived from our export industry. Naturally, fair and transparent predictable norms are important to us," Molin added.

“You have a few FTAs and I know there is concern that your trade deficits have increased after you have entered into these free trade agreements. Naturally that needs to be addressed," he said while adding that parties only enter agreements that are agreeable to them.

India and EU began negotiations on an FTA in 2007 but in 2013, it came to a halt due to differences over tariff levels of wines and spirits, auto components and data security. Since then, there have been efforts to resume discussions but progress has been sluggish.

Last month Goyal and Dombrovskis met to discuss bilateral trade and investment relations and suggest possible ways forward. Both sides reiterated their interest in resuming negotiations for comprehensive and mutually beneficial trade and investment agreements. Simultaneously, both sides examined alternative approaches and looked into the possibility fresh avenues of cooperation. For instance, there were talks around building resilience of global value chains and regulatory cooperation, notably in new technologies, according to the EU statement issued after negotiations.

When asked about the feedback from Swedish companies on investment opportunities in India, Molin said the feedback was “largely positive."

“The overall feeling is very positive. Many of the reforms that have taken place in recent years have been positive for the companies. They like the predictability and increased transparency," he said.

The good and service tax (GST), allowing the possibility of a single market with different tax rates was also termed positive.

“The possibility of states to be in some kind of a competition with each other offering good terms and increasingly better terms I think is good," Molin added.

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