India, EU Move to Strengthen Ties Amid FTA Negotiations

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Jan. 24 – India and the European Union (EU) have been moving to strengthen their ties in both the execution of an India-EU Free Trade Agreement (FTA) and in facilitating trade between Indian and European small to medium-sized enterprises (SMEs).

The EU-India FTA will be the world’s biggest trade pact, and will benefit 1.7 billion people. It would create new opportunities for both Indian and European companies, and will also be a key driver for sustainable growth, job creation and innovation in both India and Europe. The FTA is officially called the Bilateral Trade and Investment Agreement (BTIA).

The proposed FTA, however, has recently hit major stumbling blocks. The EU’s demands to raise the cap on foreign investments in the insurance sector and to decrease tariffs across the auto sector are among the challenges faced during negotiations. India also wants the EU to reduce its non-tariff barriers and to declare that India is a data secure country so as to facilitate entry of Indian IT companies into the EU.

FTA negotiations started in 2007, yet were unofficially placed on hold yesterday until the Indian Government announces its 2013-14 budget at the end of February.

The EU is India’s largest trading partner, with bilateral trade reaching US$110 billion in 2011-2012, marking a 21.4 percent increase from 2010-11.

Despite the FTA’s slow progress, Indian and EU-based SMEs have recently been linked together through a technology platform to facilitate two-way trade. Small and medium-sized industries in India that have sought collaboration opportunities or information on trade with European firms can now simply link up through the Enterprise Europe Network-India (EEN-India) platform. Partners of EEN-India include the European Business and Technology Center (EBTC), the Confederation of Indian Industry, and the Federation of Indian Export Organizations.

The EEN-India platform will serve as a networking platform in which Indian SMEs can connect to their respective sectors in the European Union. There are a total of 54 linked countries in the EEN system, including Russia, Turkey, Israel, China, Japan, South Korea and now India. The EEN will also help in sorting out issues relating to intellectual property rights during collaborations between Indian and European firms.

“[The EEN-India platform] will open the doors of the European Union to India and vice versa,” remarked EBTC director Poul V. Jensen.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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