Brussels, 25/06/2013 (Agence Europe) - Given that there is a narrow window of opportunity for concluding an agreement, with the general election coming up for summer 2014, New Delhi is critical of the endless European demands.
“The government has run out of patience and will ask the European Union to sign a free-trade deal within a narrow political window”, states the Times of India on 20 June, adding that, according to Indian sources familiar with the dossier, New Delhi is unwilling to offer further tariff cuts for automobiles and has no room to provide flexibility on pharmaceuticals and government procurement. “Industry Minister Anand Sharma has been advised to deliver a stern message to Karel De Gucht, his European counterpart, as EU's list of demands seem unending even seven years after negotiations began”, the Indian daily goes on to report.
Meetings in May, first of all at the technical level between the chief negotiators mid-month, then at political level between De Gucht and Sharma on the sidelines of the annual OECD meeting end May, did not enable the differences of opinion to be bridged between Brussels and New Delhi. Although Europe and India are very close to finalising their talks, there are still several obstacles to be overcome.
The question of the EU granting India the “data secure tag”, which would make it easier for Indian companies to bag contracts in most of Europe in order to expand its IT industry, remains a major stumbling block. Although India has reformed its law on IT by adding provisions on data protection, the strength of its system is still considered insufficient by the European side.
Furthermore, the parties involved have still not closed the gap separating them on other key chapters. Although New Delhi wants an ambitious offer from the EU on temporary work visas for those working in its IT industry, Brussels demands concessions from India on foreign investment in the insurance sector, the automotive sector, the wines and spirits sector and also regarding public procurement.
With regard to the automotive sector, India refuses to reduce its import duties below 10%, while the EU wants a shift to zero duties. On wines and spirits, India has offered to considerably reduce its tariffs to 40% compared to the current 150%, states the Indian business daily Business Standard of 17 June. The EU would like those duties reduced to 30%.
On public procurement, Brussels has demanded commitments based on the proposed new public procurement law, which has not even been placed before the national parliament. Although New Delhi is ready to engage on the issue once the law is enacted, the EU wants a firm engagement before the law is adopted and also wants the provisions of the bill to become an integral part of the free trade agreement. The stakes are enormous as public contracts represent 15-20% of India's GDP due to the country's need for infrastructure.
Hindu Business Line reports: “India's government procurement business, estimated to be worth $160 billion annually, covers a wide range of sectors, including telecom, railways, energy, roads, industry and health. The Bill proposes to regulate public procurement by all government ministries, central public sector enterprises and autonomous and statutory bodies controlled by the centre”.
At the present time, Indian public procurement is not totally closed but is open to foreign companies when the Indian authorities have a particular need, for technology in particular. Also, although the central government's public procurement is relatively open, those of the states of the federation and of local authorities are totally closed.
In addition to the above matters, Europe and India must agree on chapters relating to intellectual property and pharmaceuticals, as well as on sustainable development.
The EU and India wish to give impetus to their trading relationship which was worth a little under €80 billion in goods in 2012 (€38.4 billion in exports for the EU, €37.2 billion for India) and €20.4 billion for services in 2011. Bilateral investment exceeded €40 billion in 2010 (of which €35 billion for the EU). (EH/transl.jl)