India-EU FTA gains hinge on progress in complementary areas: Moody’s

“When in effect, the FTA will be credit positive, with lower tariffs and better market access supporting India’s ambition to develop the manufacturing sector, attract foreign investment, and strengthen the export competitiveness of its labour-intensive goods,” the credit rating agency said.

India’s conclusion of an FTA with the EU “reflects its continued efforts to selectively diversify trade relationships” and is expected to be credit positive, Moody’s Ratings said.
Lower tariffs on EU imports may also help ease costs.
“Ultimately, the broader benefits of the FTA will hinge on progress in complementary areas such as improving business friendliness and streamlining regulations,” it added.

“Lower tariffs on EU imports may also help ease costs, although such imports remain a smaller share of India’s overall import bill. European carmakers would gain easier access to the world’s third-largest car market, allowing them to introduce more premium models under a calibrated liberalisation framework: an opportunity for EU brands but adding competition for Indian manufacturers,” Moody’s noted.

“Ultimately, the broader benefits of the FTA will hinge on progress in complementary areas such as improving business friendliness and streamlining regulations,” it added.

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