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India, European Union may skirt thorny Issues, ink FTA

posted 3-May-2013

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Economic Times | May 2, 2013

India, European Union may skirt thorny Issues, ink FTA

Dilasha Seth, ET Bureau

NEW DELHI: India and European Union could sign the bilateral trade deal that has been in the works for over five years, keeping aside the contentious issues such as lower duty for European cars in India and liberal visas regime for Indian professionals in the 27-country union.

The chief negotiators of the two sides could consider this option in their meeting on May 15, an senior commerce department official familiar with the developments told ET.

India and the EU are keen to conclude the agreement in the ministerial meet planned in June, as some of the EU countries face elections in September while the UPA coalition would not want to drag the deal close to elections next year because of political reasons.

The India and EU negotiations began way back in 2007, but the two sides have not been able to narrow down their differences over the contentious issues.

EU wants India to cut tariifs for its automobiles and liberalise insurance sector while New Delhi is seeking greater flexibiilty in movement of professionals and data secure status.

Thailand and India had opted for an early harvest scheme as part of their FTA. India had also signed a slightly diluted FTA with Malaysia, and feels a same approach could be adopted with respect to negotiations with the European Union.

"That is always possible. Like with Thailand we have done just a preferential trade agreement, which is the early harvest", the official said but did not give details on what components could be taken out of the agreement.

However experts are not sure the European Union would go for a light agreement like the one India signed with Malaysia.

"Unless it gets it way with the zero tariff in auto sector, it is unli8kely to sign on the agreement", said Arpita Mukjerjee, professor, Icrier.

India’s domestic automobile industry is opposing duty concessions to European industry while higher FDI to upto 49% in insurance will require a legislative change, for which the government needs to build political consensus as it cannot get the law passed on its own strength.

Europe on the other hand is averse to granting India the data secure status, citing the lax IT laws of the country, and is finding difficult to relax movement of professionals from India because of the already high unemployment due to the financial crisis.

India has also reaffirmed its position that it cannot go beyond the parameters of the TRIPS Agreement and Indian laws for Intellectual Property Regime in the ongoing negotiations for a trade and investment agreement with EU.

The EU wants stronger patent laws to protect the interest of its multinational drugs companies that face tough competition from India’s low-cost generic companies. However, the government is unlikely to rush into a deal unless it sees gains for the country.

"There is no compulsion to sign unless we also get a fair deal. When we do a loss and gain calculus, some sectors may be hit, but will be compensated by gains in other sectors", said the official.

keywords : EUIndia source : Economic Times

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