Brussels, 13/04/2015 (Agence Europe) - The tour of India's Prime Minister Narendra Modi in France and then in Germany on Friday 10 to Monday 13 April has not enabled direct contact to be resumed with the EU for relaunching the EU-India free trade negotiation process, which stopped at the end of 2013.
European Commissioner for Trade Cecilia Malmström and India's Trade Minister Nirmala Sitharaman, who was accompanying Modi on his European tour, did not meet on the sidelines of the Hanover fair in mid-April, as Malmström had suggested in a letter to her Indian counterpart on 5 March, and as speculated by the Indian press. “Cecilia Malmström did not go to Hanover on Monday. But we are in contact to find a date and things are moving”, an EU source told EUROPE on Monday 13 April. In her letter of 5 March, Malmström had also suggested meeting Sitharaman at the OECD ministerial council in Paris on 3-4 June.
The European party would like to relaunch the process of laborious free-trade negotiations between the EU and India, which was launched in 2007 and stopped before the Indian general elections in spring 2014, after 13 rounds of technical level negotiations. “We need to know the level of ambition is the same before returning to the negotiating table. We don't yet have the signs from India. I have written to the minister to ask her for an informal meeting where we can discuss the different aspects of the EU-India relationship. I hope to meet her very soon”, Malmström told press on the sidelines of the informal European trade ministers meeting in Riga on 25 March.
Initially the EU and India wanted to boost a trade relationship which saw bilateral trade in goods double in a decade, but fall from over €80 billion in 2011 to €72.7 billion in 2013 (€35.9 billion in exports for the EU, €36.8 billion for India). Trade in services, on the other hand, continued to grow, reaching €23.7 billion in 2013. Bilateral investment was over €50 billion in 2013 (with an FDI stock of €41.8 billion for the EU in India and of €8.8 billion for India in the EU).
“Our bilateral trade relations (…) are far from optimal. There is much untapped potential in our bilateral flows, not only of goods, but also of services and investments. Furthermore, the existing legal framework of our cooperation dates back to 1994 and - even though it was reinvigorated in 2004 by the recognition of the strategic nature of our partnership - it does not capture the significant changes our economies have gone through in the last two decades and the new needs that have consequently arisen. I think the time has come for the two of us to undertake a broad reflection on how we would like to bring forward our trade relations so that we can unlock the full spectrum of opportunities to both of our economies”, Malmström wrote in her letter of 5 March.
Before the talks were stopped at the end of 2013, European and Indian negotiators had not succeeded in ironing out their differences of opinion on several key chapters - services, automobiles, wines and spirits, government procurement, intellectual property pharmaceuticals, and sustainable development (see EUROPE 10931). Furthermore, the failure of the free trade negotiations has put a brake on the bilateral EU-Indian relationship as no bilateral summit has been held since February 2012 (although in principle these summits are annual).
As during his visit to France, Modi spoke proudly in Hanover on Sunday of his country's reforms and he promoted the “Made in India” label, inviting German companies to invest in India - “the fastest growing economy in the world”. India did indeed record growth of 7.4% between 2014 and 2015. “We are reforming our institutions as never before in recent decades”, Modi said, giving assurances that his country has new infrastructure and a tax and regulatory environment that is very attractive for foreign companies. (Emmanuel Hagry)