MAINS Current Affairs includes India’s Energy Sector: A $500-Billion Opportunity for Global Investors & India–EU Free Trade Agreement (FTA)

Energy

1. India’s Energy Sector: A $500-Billion Opportunity for Global Investors

Context

At India Energy Week in Goa, the Prime Minister invited global investors to tap into India’s expanding energy landscape, calling it a $500 billion investment opportunity. Over 125 countries participated, highlighting the event’s growing global stature.

Key Highlights of India Energy Week 2026

1. Energy Independence Focus

• India emphasised its shift from energy security to energy independence, supported by long-term sustainable strategies.

2. India as a Trusted Energy Supplier

• India is among the top five petroleum exporters, sending products to 150+ countries, reinforcing its reliability in global supply chains.

3. Massive Investment Scope

• India unveiled $500 billion in opportunities spanning the full energy chain—exploration, refining, pipelines, LNG, and petrochemicals.

4. Exploration & Deep-Sea Push

• The Samudra Manthan Mission aims to attract $100 billion into oil and gas exploration and expand exploration zones to 1 million sq km.

5. Refining Hub Ambition

• India is set to become the world’s largest refining centre; refining capacity is expected to cross 300 MMTPA, making India second globally.

6. LNG & Gas Infrastructure

• Plans include meeting 15% of energy needs through LNG, supported by a ₹70,000-crore shipbuilding plan, new terminals, pipelines, and city gas networks.

7. Growing Petrochemical Demand

• India’s rising population and economic growth offer strong prospects for petrochemicals and downstream industries.

Why Global Investors Are Interested

• Strong exploration potential: New reforms, 170+ awarded blocks, and promising basins like Andaman & Nicobar.
• Better trade access: FTAs with EU, UK, and EFTA enhance global market integration.
• Expanding petrochemical market: Urbanisation and industrial growth boost downstream demand.
• Innovation-focused transition: Push for cleaner fuels and sustainable technologies.
• Stable investment climate: Policy continuity, democratic governance, and a vast domestic market.

Challenges in India’s Energy Outlook

• Rising energy demand: Urbanisation and growth pressure supply and sustainability.
• High import dependency: Crude oil and gas imports increase exposure to global shocks.
• Infrastructure gaps: Pipelines, storage, LNG terminals, and transmission networks need heavy investment.
• Energy transition complexity: Balancing fossil fuels with climate commitments remains difficult.
• Tech and skill shortages: Deep-sea drilling, advanced exploration, and LNG tech need specialised capacity.
• Supply chain bottlenecks: Ports, shipping, and inland logistics issues hinder efficiency.
• Policy inconsistency: Frequent regulatory changes and varied state rules create uncertainty.
• Financing issues: Large, capital-intensive projects require long-term, affordable funding.
• Environmental and social hurdles: Land acquisition, clearances, and local opposition delay projects.
• Geopolitical disruptions: International conflicts can affect supply chains and energy flows.

International

2. India–EU Free Trade Agreement (FTA)

Context

India and the European Union have formally concluded negotiations for a Free Trade Agreement, marking a major step in India–EU economic relations.

About the FTA

• Strengthens integration between the world’s 4th-largest and 2nd-largest economies.
• India and the EU together make up ~25% of global GDP and one-third of world trade.
• Current bilateral trade: €190 billion (goods: €120 bn; services: €80 bn).
• Expected to sharply boost trade flows over the next decade.

Major Features

1. Market Access

• India receives preferential entry into 97% of EU tariff lines (5% of trade value).
• India offers the EU access across 1% of tariff lines (97.5% of EU exports).

2. Protection for Sensitive Sectors

• India has safeguarded dairy, cereals, poultry, soymeal, fruits, and vegetables to protect domestic producers.

3. Services Liberalisation

• EU commitments across 144 service sectors, including IT, professional services, education.
• Ensures stable, predictable access for Indian service suppliers.

4. Industrial Goods

• Indian tariffs on machinery (up to 44%), chemicals (22%), and pharmaceuticals (11%) to be phased out in 5–10 years.
• Car parts tariffs removed gradually; duty on fully-built cars cut from 110% → as low as 10% under quotas.

5. Climate & CBAM Provisions

• Includes forward-looking MFN assurance so India gets equal treatment offered to others.
• Cooperation on carbon pricing, mutual verifier recognition, and assistance for Indian exporters to meet upcoming carbon rules.

6. Climate Infrastructure & Financing

• The European Investment Bank (EIB) to provide €2 billion for climate-resilient infrastructure via CDRI.
• A new EU–India climate platform to be launched in 2026.

7. Mobility Framework

• Provides assured temporary entry for professionals, including business visitors, intra-corporate transferees, contractual suppliers, and independent professionals.

8. Traditional Medicines

• In EU countries lacking regulation, AYUSH practitioners may offer services using Indian qualifications.

🇮🇳 Significance for India

1. Boost to Exports

• Expected rise in exports, especially in engineering goods, a major EU import area (~USD 2 trillion market).

2. Marine Sector Gains

• Full tariff-free access for Indian marine exports, previously taxed up to 26%.
• Beneficial for coastal states—Andhra Pradesh, Gujarat, Kerala—and India’s blue economy.

3. Gains for Labour-Intensive Industries

Zero-duty access for:

• Textiles, apparel, leather, footwear
• Marine products
• Chemicals, plastics, sports goods, toys
• Gems & jewellery

4. Imports of EU High-Tech Goods

• Diversifies import sources, lowers input costs, boosts productivity, and enhances India’s participation in global value chains.

5. Agriculture Benefits

Preferential access for:

• Processed foods, tea, coffee, spices
• Grapes, gherkins, sweet corn, dried onion
• Sheep & lamb meat

This supports rural incomes, boosts women’s participation, and strengthens India’s presence in European premium markets.

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