Merkel, Modi aim for free trade agreement between EU and India

Angela Merkel at the Indo-German Business Summit in Hannover. [Bundesregierung/Bergmann]

In Berlin, Germany and India expressed their intention to work together more closely on economic and political matters, while emphasising closer cooperation on military sales. EURACTIV Germany reports.

Chancellor Angela Merkel and her Indian counterpart, Narendra Modi, both spoke in favour of a free trade agreement between the EU and India on Tuesday (14 April).

Before consultations in October, a joint working group is expected to assess whether to loosen German export restrictions on dual use goods, which are suited for both civilian and military use.

Modi and Merkel also expressed their support for closer armaments cooperation.

On Tuesday, Modi concluded a three-day visit to Germany. India is the partner country of this year’s Hannover Trade Show.

The two governments, as well as industry associations in both states, expressed dissatisfaction over bilateral trade relations. Since 2012, the value of exchanged goods has decreased to €16 billion – although India is one of the fastest growing economies in the world.

The Indian Prime Minister criticised the fact that talks over a free trade agreement with the EU have not taken place since 2013.

“I wish the negotiations are taken up again, and we come to a common solution,” he said.

>>Read: India ready to revive trade talks with the EU

The Chancellor also spoke of common interest in reconvening talks. A passage to this effect can also be found in a joint statement from the two governments.

Modi made it clear that Germany is also a favoured partner in building a dual education system, and expanding the renewables sector.

In addition, he emphasised India’s interest in purchasing German military hardware. During a visit to France, India signed an agreement to buy 36 Rafale fighter jets.

Merkel also said that cooperation on armaments is desirable. Besides aircraft, it could also include submarines, she said.

“We definitely also hear India’s wishes for cooperation in this area with attentive ears,” Merkel stated.

Both governments also hope to strengthen foreign policy cooperation and the fight against terrorism.

Modi was especially critical of the fact that the UN Security Council has still not been reformed.

The fact that a country with one-sixth of the world population, and which has never attacked another country is not represented, raises important questions, the Prime Minister commented.

“Germany and India have the right to permanent representations,” he stated. Along with Japan and Brazil, both countries have for years been hoping for a permanent seat in the UN’s highest decision-making body.

EU-India relations date back to the early 1960s, when diplomatic relations were first established. But it was 1994's Cooperation Agreement (which is still the current legal framework for cooperation) that opened the door to the broad political dialogue that has since evolved, notably through annual summits since 2000, and regular ministerial and expert-level meetings.

In recognition of both sides' political and economic importance, the EU-India Strategic Partnership was launched in 2004, in order to enable the two partners to better address complex international issues in the context of globalisation.

To underpin the Strategic Partnership, leaders adopted the EU-India Joint Action Plan (JAP) at their 2005 summit. The JAP defined common objectives and proposed a wide range of supporting activities in areas of political, economic and development cooperation.

In recent years, the establishment of a Free Trade Agreement between the two partners has gained momentum and a deal wasexpected in the spring of 2011, but disagreements have marred talks' progress.

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