Germany and the United Kingdom will witness the highest absolute gains if the proposed Free Trade Agreement (FTA) between India and the European Union (EU) is concluded. With Brexit, India will stand to lose almost 21 per cent of the proposed gains from the FTA, which is officially called the Broad Based Trade and Investment Agreement (BTIA). As a result, India will then have to negotiate a separate trade pact with the UK to compensate for the losses.

But the EU is keen on an FTA with India. The EU wants more market access in India for textile and agriculture sectors. Among the sensitive issues is that of data adequacy, one of India’s long-standing demands. Some others are market access for agricultural items and labor and environmental standards.

For democracies, FTAs are not merely a function of economic benefit. The fundamental challenge is that agreements happen when the leadership feels it can politically sell it. For instance the business community in India says an FTA with the EU will increase competition and lead to job losses. The fear is that an FTA would put the domestic auto industry in India at risk from German counterparts.