FTA: Key Takeaways
The India-EU Free Trade Agreement, hailed as a significant development, aims to deepen trade ties and manufacturing within the healthcare and pharmaceutical
industries. This agreement is expected to remove EU tariffs of up to 11% on pharmaceuticals. India will offer tariff reductions not offered to other trading partners. Tariffs on cars will decrease from 110% to as low as 10% eventually. Tariffs on machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%) are also slated for elimination. The agreement reinforces the intellectual property framework while also supporting greater access to innovative medicines for Indian patients. However, the fine print of the deal, including regulatory alignment, and safeguards against unfair competition, is considered crucial for its success.
Pharma's New Chapter
The pharmaceutical sector views the FTA as a boost to the already strong relationship between India and the EU. This partnership is already robust, with India exporting approximately $5.8 billion worth of drugs to Europe in the financial year 2024-2025. With tariff reductions, Indian generic medicine manufacturers are expected to strengthen their role in Europe. The deal also reassures the industry regarding intellectual property rights, an area that has often been sensitive in trade discussions. Simultaneously, European pharmaceutical companies see India’s growing healthcare market as a promising destination for their premium biologics and patented therapies. The focus is on ensuring that the agreement’s detailed provisions strike a balance between open trade, domestic capabilities, competition, collaboration, and patient safety.
Device Sector Outlook
For the medical devices industry, the focus is on maintaining fair competition and preventing any unintended consequences. Domestic manufacturers are cautious, as tariff reductions could lead to predatory imports from third countries if not managed carefully. The FTA has the potential to start a new chapter in healthcare cooperation. According to Pavan Choudary, the FTA could open “a new chapter in healthcare cooperation.” Success will be measured not just in economic terms but also “in lives improved and saved.” The removal of device tariffs should make advanced therapies more affordable and accessible. The EU has emphasized that the FTA will not dilute regulatory oversight, and all pharmaceutical imports from India will continue to fully comply with strict health, safety, and product quality standards.
Key Considerations
Stakeholders are emphasizing the importance of factors beyond headline tariff cuts. Regulatory alignment, safeguarding against unfair competition, and ensuring patient safety will ultimately determine the FTA’s impact. Rajiv Nath highlighted the importance of patient safety and quality standards, advocating for a mutual recognition agreement based on common ISO standards. The agreement's success hinges on balancing openness with domestic capacity, fostering competition and collaboration, while upholding patient safety standards. The EU has made it clear that the trade agreement does not dilute regulatory oversight. The real impact will depend more on how its detailed rules balance openness with domestic capability, competition with collaboration, and trade growth with patient safety.
