Brussels, 29/03/2012 (Agence Europe) - After having made no progress for a long while, the EU and India have now made considerable headway towards concluding a broad-based trade and investment agreement (BTIA), considered by both partners at their annual summit on 10 February as possible by this autumn. However, the questions still to be settled are the most sensitive ones - especially that of the motor industry and public procurement.
Although the issue of reducing Indian tariff lines on the auto sector is one of the main aims of the EU, pushed on by its automotive manufacturers (ACEA), India, which wants to protect its emerging industry, is putting up resistance. According to the Indian daily, the Financial Express, on 28 March, this “contentious issue … may not figure in the negotiations over the BTIA”. The Indian automotive industry continues to warn against concessions being granted to European-based auto majors, including lowering duty on imported cars in the proposed free trade agreement (the EU would like to reduce them from 60 to 30%). According to an Indian government source, India's Trade Minister Anand Sharma stressed when talking to Trade Commissioner Karel De Gucht that “since the industry is in the nascent stage in the country, there is very limited room for manoeuvre”. In addition to the fact that automotive products have appeared on the Indian list of sensitive products in all FTAs negotiated hitherto, New Delhi does not wish to create disparity between foreign manufacturers by conceding more to the EU than to South Korea or to Japan, that have poured major investment into India.
Another sensitive issue is the opening of India's public procurement markets. According to a European diplomatic source in India, cited by the French daily, Les Echos, on 21 March, the EU is seeking reciprocity for the opening of its public sector to Indian ICT service businesses. The stakes are enormous, as public procurement orders account for 15-20% of India's GDP, especially because of the country's need for infrastructure. Indian public procurement is not closed but is opened up to foreign companies when the Indian authorities have specific needs, for example in technology, one expert explains: if it wants to built a modern metro system, India signs with a foreign provider but the opening of calls for tenders from foreign candidates is not guaranteed. Also, although public procurement contracts from the central government are relatively open, those of the states of the federation and local authorities are totally closed.
In addition to the automotive sector and public procurement, Europeans and Indians must find solutions on the wines and spirits sector, for which the EU wants a maximum reduction of the considerable local taxes and Indian national taxes. It is also necessary to reach agreement on the liberalisation of services, with India calling for better access to the European market for its experts qualified in information technology, as well as agreement on clauses of the agreement relating to sustainable development and medicines.
In total, an EU/India free trade agreement, which will become the biggest in the world to the benefit of 1.7 billion inhabitants, would allow asymmetrical reduction in customs duties, 91-92% of EU products, compared with 95% of Indian products. (EH/transl.jl)