India may suggest a compromise formula on insurance to the EU for inclusion in the proposed bilateral Free Trade Agreement in case there is a further delay in getting Parliament’s approval for the Insurance Bill. The Bill seeks to increase foreign direct investment cap in the sector to 49 per cent from the present 26 per cent.
Since the EU is insistent on including the insurance sector in the FTA, India could try to convince it to agree to a transitionary text which would commit both sides to engage on the issue once the Insurance Bill becomes an Act, a Commerce Department official told Business Line .
“If there are certain areas, like insurance and Government procurement, where things are stuck in Parliament, the deal need not get stuck because of it. We could have provisions within the FTA that would commit both sides to hold fruitful negotiations in nominated areas once the legislations get passed,” the official said.
Although the UPA Government wants to place the pending Insurance Bill before Parliament during the on-going session, a belligerent BJP may make things difficult.
India and the EU are in the last round of negotiating an ambitious free trade agreement officially known as the Broad-based Trade & Investment Agreement. Once implemented, it would bring down tariffs on majority of industrial and farm goods traded between the two countries, open up the services sector and liberalise rules in a number of other areas like Government procurement.
The last mile negotiations are, however, proving to be the toughest with both sides refusing to budge from their stated position in a handful of areas stalling the talks.
While the EU does not want an agreement that does not include substantial liberalisation of insurance and Government procurement sectors, India has dug its heels over its condition that it be declared as a data secure country and that the commitments in opening up the services sector shouldn’t come with stiff safeguards.