India within striking distance of big bang trade pact with EU
Economic Times | 20 July 2006
India within striking distance of big bang trade pact with EU
AMITI SEN
NEW DELHI: A CECA with EU may look like an alphabet soup, but would spell a whole new range of opportunities for Indian enterprises and professionals.
High on its success with the comprehensive economic co-operation agreement (CECA) with Singapore, the government is now planning a similar deal with the 25-member European Union.
A notable feature of the Singapore agreement is recognition by Singapore of a number of Indian professional certifications, and free mobility for qualified Indian service providers.
India and the EU have set up a high-level trade group to examine ways in which the CECA - an agreement on trade in goods and services, investment, movement of service providers and taxation - could be designed. The group will submit its report in October this year during the India-EU business summit in Helsinki.
Speaking to ET, official sources said that while the EU wants to have a greater market access for its industrial goods, India is interested mostly in services and also to some extent, in investments.
With a huge pool of professionals eager to work in European countries, India has been asking the EU to remove unnecessary restrictions on their movement like the non-transparent application of the economic needs test. It is also eager to put in place mutual recognition agreements, wherein the two sides would give recognition to degrees, diplomas and other qualifications earned by service providers in their home countries.
Interestingly, the EU does not seem averse to the idea of getting more professionals from India. With an increasingly ageing population, the EU wants to grab a greater share of Indian professionals who are, at present, more interested in moving to the US. India, on its part, would be asked to bring down its import duties on industrial goods for EU members. As the EU’s average import tariffs stand at below 4%, India’s gains from reduced duties would be relatively lesser than that of the EU.
The EU is also likely to ask India to liberalise its financial sector on the lines of the India-Singapore CECA. India offers national treatment (pre-establishment) to Singapore banks under the CECA and has also allowed three Singapore banks to set up wholly-owned subsidiaries in India.
India’s bilateral trade with the EU, which happens to be the country’s largest trading partner, stood at $35.3bn in ’04-05, registering a growth of 20% over the previous year and accounting for about 20% of India’s global trade. Exports to the EU were valued at $17.3bn and imports from the EU were at $18.1bn.
India’s annual services exports to the EU, valued at about $3bn, has a huge growth potential. According to a study done by Assocham, India will occupy a leading position in providing services to developed economies such as EU and others by ’20. By then, the country will have an estimated surplus of 47m professionals in IT and services who can be gainfully used by recipient countries.
