What Happened
- Trade experts have raised concerns that India's expanding FTA network with the United States and the European Union could erode domestic policy autonomy in agriculture, public health, and industrial development.
- Regarding the EU, the Working Group on Access to Medicines has flagged that the IP chapter in the India-EU FTA includes intellectual property protection and enforcement standards that go beyond minimum WTO TRIPS obligations, though the Indian government has clarified that it does not require amendment to existing IP laws and does not impose TRIPS-Plus data exclusivity.
- The US has pressed for wider market access in agriculture (especially dairy and genetically modified crops), fewer restrictions on medical devices, and stronger patent enforcement; India has sought relief from US tariffs on steel and auto components and more flexibility on pharmaceutical exports.
- Experts flag that the EU's Carbon Border Adjustment Mechanism (CBAM) could cause a 10% annual decline in Indian engineering exports, even within the FTA framework.
- Several trade analysts favour pursuing limited "early harvest" agreements that focus on sectors with mutual benefit, rather than sweeping comprehensive FTAs that risk surrendering regulatory control over politically sensitive sectors.
Static Topic Bridges
Free Trade Agreements and India's Trade Policy
A Free Trade Agreement is a pact between two or more countries to reduce or eliminate barriers to trade, including tariffs, quotas, and non-tariff barriers. India has signed FTAs with ASEAN, South Korea, Japan, the UAE, Australia, and the EU, while pursuing negotiations with the UK, Canada, and exploring a trade deal with the US.
- India's FTA strategy has evolved from conservative agreements aligned with TRIPS minimum standards (e.g., ASEAN FTA, 2010) to broader deals with enhanced IP coverage (e.g., India-UAE CEPA, 2022; India-EU FTA, 2026).
- India's trade deficit has historically widened with several FTA partners (e.g., ASEAN, South Korea), fuelling domestic criticism that FTAs disproportionately benefit partner countries.
- The India-EU FTA, concluded in January 2026, is India's most ambitious trade deal, covering goods, services, investment, digital trade, and sustainability provisions.
- Article XIX of GATT provides a "safeguard clause" allowing temporary restrictions on imports that cause serious injury to domestic industry.
Connection to this news: The expert concerns highlight the inherent tension in India's FTA strategy between market access gains and the risk of conceding regulatory space in agriculture, health, and industry policy.
TRIPS Agreement and Intellectual Property in Trade
The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), under the WTO since 1995, establishes minimum standards for IP protection that all WTO members must implement. TRIPS-Plus provisions go beyond these minimum requirements and are often sought by developed countries in bilateral FTAs.
- India's Patents Act, 1970 (amended in 2005 to comply with TRIPS) includes key public health safeguards: Section 3(d) prevents evergreening of patents by requiring enhanced efficacy for new forms; compulsory licensing provisions under Sections 84 and 92 allow generic manufacturing during health emergencies.
- TRIPS-Plus provisions commonly sought in FTAs include data exclusivity (preventing generic manufacturers from using originator trial data), patent term extensions, and limitations on compulsory licensing.
- India is the "pharmacy of the developing world," supplying over 50% of global demand for generic medicines and 60% of global vaccine production.
- The Doha Declaration on TRIPS and Public Health (2001) reaffirmed countries' right to use TRIPS flexibilities for public health protection.
Connection to this news: The concerns about IP provisions in the India-EU and India-US trade negotiations directly relate to whether India can maintain its Section 3(d) and compulsory licensing safeguards that have made it a global leader in affordable generic drug production.
Carbon Border Adjustment Mechanism (CBAM) and Trade
The EU's CBAM, which entered its transitional phase in October 2023 and will be fully operational by 2026, imposes a carbon price on imports based on the greenhouse gas emissions embedded in production. It currently covers iron, steel, aluminium, cement, fertilisers, electricity, and hydrogen.
- CBAM requires importers to purchase certificates corresponding to the carbon price that would have been paid if the goods were produced under EU emission trading rules.
- India's iron and steel exports to the EU were valued at approximately $8.2 billion in 2024-25, making this sector particularly vulnerable.
- India has termed CBAM a unilateral trade measure inconsistent with the principle of Common But Differentiated Responsibilities (CBDR) under the UNFCCC.
- Developing countries argue CBAM penalises nations that have contributed least to historical emissions while still industrialising.
Connection to this news: The expert warning of a 10% annual decline in engineering exports due to CBAM underscores that even within an FTA framework, non-tariff measures tied to climate policy can significantly impact Indian exporters.
Key Facts & Data
- India-EU FTA concluded in January 2026, India's most comprehensive trade deal to date.
- India supplies over 50% of global generic medicines; TRIPS-Plus provisions in FTAs threaten this role.
- Section 3(d) of India's Patents Act prevents patent evergreening and is a key safeguard in FTA negotiations.
- EU's CBAM covers iron, steel, aluminium, cement, fertilisers, electricity, and hydrogen.
- India's engineering goods exports to the EU could decline by 10% annually due to CBAM.
- US seeks wider market access in dairy, GM crops, and medical devices; India seeks tariff relief on steel and auto components.
- Trade experts favour "early harvest" sectoral deals over comprehensive FTAs to preserve policy autonomy.