NEW DELHI, Oct 24 (Reuters) – Agriculture is the “most problematic” area in talks to secure a free trade deal between India and the European Union, German Economy Minister Robert Habeck said on Thursday, suggesting that it would be better to focus on the industrial sector first.
Habeck is in India for a regional business conference and is part of a high-level delegation that aims to build better trade and business relations between two of the world’s biggest economies.
Agriculture is a problematic area as there is a huge variation in the number of people working in the farm sector in India and Germany, he told reporters, adding that it was 2% of the population in Germany compared to about 60% in India.
“So you can’t compare the two agricultural systems. If you were to open the markets completely … the disruption to the Indian market will be tremendous,” Habeck said.
It would be faster, smoother and practical to focus on the industrial sector instead, he said.
Although this is “not in line” with what the EU normally does, a “shortcut” may be the way forward as clubbing agriculture, services and industry was making it difficult, Habeck added.
India and the EU agreed in 2022 to relaunch talks on a free trade agreement, initially aiming to complete talks by the end of 2023, but have failed to make significant progress on a deal, with India blaming “irrational” standards set by the EU as one of the reasons.
The visit of the delegation comes at a delicate time for Germany, whose export-oriented economy faces a second year of contraction and worries over a trade dispute between the European Union and China that could rebound on German companies.
Chancellor Olaf Scholz, who is travelling with most of his cabinet, will hold talks with Indian Prime Minister Narendra Modi on Friday before presiding over the seventh round of Indian-German government consultations.
During his last visit to India in Feb. 2023, Scholz said that he and Modi were committed to sealing a free trade deal between India and the EU.
