India-EU Inching Towards FTA
Mar. 17 – India and the European Union are working towards increasing bilateral ties in a hope to sign the India-EU economic agreement soon. The FTA will cover trade in goods and services, IPRs, cross-border investments, competition policy and government procurement.
The EU is already India’s largest trading partner with a trade in goods accounting for 46 billion euros and trade in services worth 10 billion euros, accounting for a fifth of India’s total trade. The EU is also one of India’s largest sources of foreign investment. India on the other hand, currently accounts for less than 2 percent of the EU’s total trade. India’s main exports to the EU include textiles, chemicals and machinery, while imports include machinery and transport equipment.
Although a EU delegation is currently in India to work out the finer details of the FTA, India is likely to take her time in finalizing the deal. According to experts privy to the initial draft of the agreement, India needs to agree to lowered tariffs in agriculture and industry with no reciprocal gesture from the EU. India however feels that it has more bargaining power due to the strength of her technology and service sectors.
During the three day meeting India plans to make sure that EU member states do not implement non-trade barriers for Indian goods but provide real access to EU markets though tariff reduction and the removal of trade curbs.
The EU is also pitching for a major relaxation in India’s banking and financial sector regulations. European Banks already have a large presence in India. Banks such as BNP Paribas, Barclays Bank, Crédit Agricole, Deutsche Bank, HSBC, Rabobank Group and the Royal Bank of Scotland already account for 65 percent of the foreign banks assets in India and are in the process of seeking licenses to expand their presence in the county.
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