German Economic Minister Robert Habeck has identified agriculture as the most challenging sector in negotiations for a free trade agreement between India and the European Union. Habeck, who is currently in India for a regional business conference, suggested that focusing on the industrial sector might be a more viable approach.
Habeck, part of a high-level delegation aiming to strengthen trade and business ties between the two global economic giants, highlighted the significant disparity in the agricultural workforce between India and Germany. He noted that while only 2% of Germany's population is engaged in farming, this figure stands at around 60% in India.
"You can't compare the two agricultural systems. If you were to fully open the markets, the impact on the Indian market would be enormous," Habeck stated. He argued that it would be more efficient and practical to prioritize the industrial sector instead.
Although this approach deviates from the EU's usual strategy, Habeck suggested that a "shortcut" might be necessary, as combining agriculture, services, and industry in the negotiations has proven difficult. India and the EU agreed in 2022 to resume talks on a free trade agreement, with an initial goal of concluding by the end of 2023. However, significant progress has been elusive, with India citing "irrational" EU standards as a key obstacle.
The delegation's visit occurs at a sensitive time for Germany, whose export-driven economy is facing a second year of contraction. Additionally, concerns over a potential trade dispute between the EU and China could adversely affect German businesses. Chancellor Olaf Scholz, who is accompanying most of his cabinet, will meet with Indian Prime Minister Narendra Modi on Friday to discuss these issues before leading the seventh round of Indian-German government consultations.
During his previous visit to India in February 2023, Scholz expressed his commitment, along with Modi, to finalizing a free trade deal between India and the EU.
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