The chief of Europe's leading industry body presents his view on how relations between India and the European Union will pan out in 2018 and the prospects of a long-pending free trade agreement (FTA).

This year marks the 55th anniversary of diplomatic relations between India and the European Union. And while that is an achievement in itself, the partnership has yet to produce an actual free trade agreement (FTA) between both regions. Despite many agreements in areas like humanitarian aid, R&D, security and sustainable development, there has been a long-lasting lack of consensus on some elements of a prospective FTA, for which the talks were initiated in 2007. In view of the potential benefits, it is important for both sides to look beyond those differences. Commonalities between India and the EU make them good candidates for a mutually-beneficial FTA. Besides being two of the largest democracies and two of the world's biggest economies, they share many core values like freedom, tolerance and the rule of law. Even without an FTA, bilateral trade in goods and services between India and the EU more than doubled during the last ten years, surpassing $100 billion a year, while also being rather balanced. The EU is currently India's biggest trade and investment partner, accounting for 13.5 per cent of its total trade volume. Combined with the fact that India has one of the biggest and fastest-growing markets in the world, there are clear incentives for creating - together with the EU - what would be the largest free trade area, covering nearly a quarter of the world's population. The benefits of lifting trade barriers and facilitating investment are tangible for both sides.

The implementation of a fair and comprehensive free trade agreement would open up access to the untapped potential in EU-India trade, promoting sustainable growth and development and creating jobs and prosperity across both regions. It would foster competition between Indian and European companies, as well as increase their competitiveness on a global scale. Indian businesses would have better access to European technical know-how and investment, while European businesses would benefit from better intellectual property protection in India and profit from easier market access to sell their products and services. Following a four-year standstill, due to a mismatch of the level of ambitions, the Bilateral Broad-Based Trade and Investment Agreement (BTIA) has recently received new impetus. At this year's EU-India Summit, both sides "expressed their shared commitment to strengthening the Economic Partnership between India and the EU and noted the ongoing efforts of both sides to re-engage actively towards timely relaunching negotiations for a comprehensive and mutually beneficial FTA".

[1] EUROCHAMBRES welcomes these ambitions and stresses the importance of continuing to regularly consult business and civil society in order to include their views in the negotiation process going forward. This will ensure that the FTA's possible economic benefits are maximised and correspond to business realities, and that any concerns are dealt with as soon as possible. The BTIA is an ambitious initiative and the best tool to achieve significant market openings and improve the overall trade and investment conditions for EU companies in India and Indian companies in Europe.

While we would strongly welcome a swift conclusion of the BTIA, we also acknowledge the significant outstanding differences in the negotiations, as well as the Brexit challenge looming over the negotiations talks. To overcome these challenges both sides will need to take the necessary steps towards reaching a reasonable compromise without losing sight of the principles of effectiveness, transparency and a balance of interests. Equally, as in all trade negotiations, the high-quality standards for consumer and environmental protection must be kept, as business can have no interest in a regulatory race to the bottom. Rather we need concerted efforts to build an effective framework that will allow greater access to products and services that can match the needs and wishes of our citizens. During the negotiations it will therefore remain important to keep in mind the main goal of stronger economic relations between India and the European Union, in order to foster trade and investment for the benefit of all. To this end, it will be highly beneficial for India to continue its process of economic reform and progressive integration with the global economy, reinforcing its commitment to fair, open, and inclusive global trade. In this context, EUROCHAMBRES recognises the establishment of the Investment Facilitation Mechanism for EU Investments in India. It represents a first step to keep protecting the substantial EU investments in India and to facilitate future ones, but its level of ambition is not sufficient and it does not replace the bilateral investment treaties that India terminated in 2016.

For our regions to be able to continue to build on a thriving investment relation, a worthy succession regime for European Investment in India must also be prioritised and secured swiftly. While the BTIA would be a significant milestone in EU-India economic relations and needed to deepen our Strategic Partnership, it is certainly not a prerequisite to do business between both sides. In the absence of a free trade agreement with India, EU companies stand ready to take matters into their own hands to benefit from the substantial opportunities that the Indian market offers. Here effective economic diplomacy is the key in helping the day to day efforts of our companies in securing business partnerships and opportunities on both sides, thereby co-creating new solutions, for a global market. Profiting from experiences and networks from established European business interlocutors (such as Chambers, EBD, or the EBTC) in India and vice-versa will remain very important in driving new bilateral initiatives forward. With ample business opportunities present in the EU-India relations, it is up to government and business to make the most out of them.

Arnaldo Abruzzini is the Chief Executive Officer (CEO) of EUROCHAMBRES, the Association of European Chambers of Commerce and Industry since 1999.